U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
In the Matter of )
)
The Appeal of )
)
VANIER GRAPHICS, INC. ) Docket No. GPO BCA 12-92
Jacket No. 762-776 )
Purchase Order K-1015 )
DECISION ON MOTIONS AND ORDER
This appeal, timely filed by Vanier Graphics, Inc. (Appellant
or Contractor), P.O. Box 190, Eden, North Carolina 27288, is
from the final decision, dated December 24, 1991, of
Contracting Officer Richard W. Wildbrett (Contracting
Officer), of the U.S. Government Printing Office's (Respondent
or GPO or Government), Dallas Regional Printing Procurement
Office (DRPPO), U.S. Courthouse & Federal Office Building,
1100 Commerce Street, Room 3D4, Dallas, Texas 75242-0395,
partially terminating the Appellant's contract identified as
Jacket No. 762-776, Purchase Order K-1015, for default because
of its inability to produce a product which met the contract
specifications (R4 File, Tab A).1 The Board held a prehearing
telephone conference on June 28, 1993, followed by two
telephone status conferences on October 5, 1993 and February
8, 1994, respectively.2 See, Board Rules, Rule 10. At the
close of the second telephone status conference, the parties
stated their belief that based on the evidence elicited
through discovery, the case could be disposed of on motions
for summary judgment. RTSC-2, p. 4. See, Board Rules, Rules
14 and 15. Accordingly, on February 25, 1994, and March 17,
1994, respectively, the Appellant and the Respondent filed
separate motions for summary judgment with the Board (Motion
and Cross Motion).3 On March 7, 1994, Counsel for GPO
submitted Respondent's Opposition to Appellant's Motion for
Summary Judgment (Res. Opp.). Similarly, on April 12, 1994,
the Counsel for the Appellant filed Appellant's Opposition to
Respondent's Motion for Summary Judgment (App. Opp.).4 For
the reasons which follow, both the Motion and Cross Motion are
DENIED.
I. BACKGROUND5
1. This appeal stems from the DRPPO's issuance of an
Invitation for Bids (IFB) on July 27, 1990, for the production
of 312,000,000 (plus or minus 24,000) copies of a form
entitled "Flight Progress Strips-Enroute" (flight strips), for
the U.S. Department of Transportation, Federal Aviation
Administration (FAA) (R4 File, Tab A).6 Among other things,
after warning prospective bidders, in underlined, capital
letter words, to "Read Carefully-This Specification Has Been
Extensively Revised", the IFB provided, in pertinent part:
The bidder agrees that any contract resulting from the
bidder's offer shall be subject to all terms and
conditions of U.S. Government Printing Office Contract
Terms dated September 1, 1988 (GPO Pub[.] 310.2).7 In
case of conflict the provisions of this specification
will prevail.
* * * * * * * * * *
CONTINUOUS FORM REQUIREMENTS: The strips are prepared on
any or all of the following equipment. To function
properly when processed through this equipment, the
position of the printed rules and the perforations must
not exceed the tolerances stated herein.
Wespercorp Model 2501010 Printer
IBM 1980 Selectric Model 1 Printer
RO-28 Teleprinter Modified
PINFEED HOLES: Pinfeed holes must be clean cut, 5/32
inch diameter. The centers of the left side holes must
be 1/4 inch from the left edge of the form. The first
pinfeed hole center on the first flight progress strip
must be 1/4 inch from the top edge of that strip. The
center-to-center distance on all pinfeed holes on an
edge, or vertical spacing, must be 1/2 inch. Horizontal
distance between pinfeed hole centers must be 8-1/2
inches. The actual measured distance between pinfeed
hole centers within any 4-foot section of continuous
forms must not exceed the theoretical distance, but may
be up to 1/16 inch less than the theoretical distance.
Theoretical distance is defined as the number of spaces
between holes multiplied by 1/2 inch. The measurement
will be made by removing the continuous form from the
box and laying the form in a straight line on a flat
surface. The actual measured distance between pinfeed
hole center lines within any 4-foot section on one edge
must not differ from the same measurement made on the
other edge by more than 1/32 inch.
PERFORATIONS: Perforate horizontally across the entire 9
[inch] dimension every 1[-]1/3 [inch] + .008 inch
between strips and perforate vertically 1/2" from the
left and right edges of the strips.
The perforations, both horizontal and vertical, must be
10-cut slit perforations per inch with a minimum amount
of paper hinge between each cut. The perforations must
permit separation on the line of perforation after
printout without tearing, but remain joined while
passing through the printers. Horizontal perforations
must start with a tie on the left edge and continue the
full width of the form, ending with a tie. Tensile
strength across perforations, using a 15mm (.6 inch)
strip, must not exceed 3.0 KG (6.6 pounds) nor be less
than 2.0 KG (4.4 pounds).
Thickness of the flight progress strips at the
perforation line between individual strips must not
exceed 0.0005 inch greater than the average thickness of
the individual strips.
PRIOR-TO-PRODUCTION SAMPLES: Prior to commencing
production, the contractor must submit for approval
12,000 (two boxes) of prior-to-production flight strip
samples. The samples must be printed on the paper and
in the ink that will be used in the complete production
and be trimmed, marginally punched and perforated in
exact accordance with these specifications.
The samples will be checked for quality and compliance
with these specifications and actual usage tests will be
conducted using the data printers listed [above]. If,
in the opinion of the GPO, the samples fail to comply
with any of the specified requirements or fail to
function properly during the usage tests, they will be
rejected and additional samples will be required at no
additional expense to the Government. The [shipping]
schedule . . . cannot be extended to allow for such
additional sampling. The contractor will be notified of
approval or disapproval within 15 workdays from receipt
of the samples in the Government Printing Office,
Dallas, Texas.
To maintain the shipping schedule . . . , the flight
strip samples must be DELIVERED to the United States
Government Printing Office in Dallas, Texas not later
than September 7, 1990. . . .
* * * * * * * * * *
INSPECTION AND TESTS: Refer to Article 14, Contract
Clauses, GPO Contract Terms, dated September 1, 1980.8
The critical application of flight progress strips
dictate that all physical attributes specified herein be
subject to inspection and the contractor will be
responsible for all testing and inspection necessary to
produce, page, and transport flight progress strips in
accordance with these specifications.
The importance of uniform, adequately-cut perforations
deep enough to permit easy separation and parallel
alignment cannot be over-stressed. The constant
parallel alignment of the perforations and the pin-feed
holes must be monitored very closely to ensure perfect
alignment throughout the entire production. Continuous
quality control inspection and prompt replacement of
dulled cutting edges are vital. Strips having cuts
which cause separation difficulties could contribute to
air traffic control problems and result in unsafe flying
conditions.
One sample flight progress strip holder will be provided
for contractor use. This holder will be certified to
conform to the correct dimensions and tolerances. The
holder is provided to allow the contractor to gauge the
fit of the flight progress strips during manufacture.
The strips produced must slide into this holder with
what is best termed in machinery terminology as "a light
push fit" without bending or buckling.
QUALITY ASSURANCE: The final acceptance of these flight
progress strips is at the destination with acceptance
inspection as specified by MIL-STD-105D. In brief MIL-
STD-105D is an established method of sampling inspection
by attributes of incoming lots of material. Lot size
basically determines the sample size to be selected from
the lot and inspected. The results of the sample
inspection determine if the lot is accepted or rejected.
The acceptable quality level (AQL) will be one percent
as defined by MIL-STD-105D. A list of these items
include but are not limited to the following: paper
thickness, thickness at the perforations, sizes of the
holes, perforations, printing, basic size dimensions,
labeling, packaging, paper type and color.
SAMPLING PLAN: General Inspection Level II and a
Multiple Sampling Plan with an Acceptance Quality Level
of 1.0 Equivalent Defects per 100 items will be used to
determine the sample size. The unit that establishes
the lot size used to determine the exact sampling plan
for each shipment will be one shipping container of four
boxes with each box having 6,000 flight strips = 24,000
flight strips. (Table "I", MIL-STD-105D)
To determine the acceptance of one shipping container,
80 flight strips will be randomly selected from one of
the four boxes. If no flight strips are found
defective, the shipping container will be accepted. If
four or more flight strips are found defective, the
shipping container will be rejected. If one to three
flight strips are found defective, another 80 flight
strips will be randomly selected from one of the other
three remaining boxes. The result of the second sample
will be accumulated with the first sample and will
result in acceptance with one defect or rejection with
six or more defects. If 2 to 5 defective strips are
found, a third sampling of 80 will be necessary, and so
on in accordance with Table "M" MIL-STD-105D, until the
shipping container is either accepted or rejected.
The number of shipping containers in a shipment will
determine the sample size (number of shipping containers
to be inspected) to be selected from the shipment. For
example: Assume there are 16 shipping containers on a
pallet and there are 52 pallets in the shipment. The
lot size then will be 780 shipping containers (16 x 52 =
780). The sample size for this lot size is 20 shipping
containers (Table "I" MIL-STD-105D). If 2 or more
shipping containers are found defective, the shipment
will be rejected. If 1 shipping container is defective,
a second sample of 20 shipping containers will be
inspected and the result of that inspection will be
accumulated with the first sampling. The shipment will
be accepted if no defects are found and rejected if 3 or
more shipping containers are defective. If a
determination still cannot be made, a third sample of 20
shipping containers will be necessary, and so on in
accordance with Table "J" MIL-STD-105D, until the lot is
either accepted or rejected.
* * * * * * * * * *
SCHEDULE: See "Notice of Compliance with Schedules",
Article 12, Contact Clauses, GPO Contract Terms, dated
September 1, 1988.
Material will be available for pick up at the Dallas
RPPO on: August 20, 1990
Prior-to-production Samples delivered to Dallas RPPO by:
September 7, 1990
Prior-to-production samples will be available for pick
up at the Dallas RPPO on: September 28, 1990
Ship complete on or before: November 30, 1990
See, R4 File, Tab A, pp. 1, 3-5, 7. Furthermore, since GPO
Contract Terms is incorporated by reference in the contract, the
following articles, in pertinent part, are relevant:
5. Disputes.
(a) Except as otherwise provided, any dispute concerning
a question of fact arising under or relating to this
contract which is not disposed of by agreement shall be
decided by the Contracting Officer, who shall make
his/her decision in writing and mail or otherwise
furnish a copy thereof to the contractor.
(b) The decision of the Contracting Officer shall be
final and conclusive unless, within 90 days from the
date of receipt of such copy, the contractor mails or
otherwise furnishes written notice of appeal to the
Government Printing Office Board of Contract Appeals.
* * * * * * * * * *
(d) In connection with any appeal under this article,
the contractor shall be afforded an opportunity to be
heard and to offer evidence in support of his/her
appeal. Pending final decision of a dispute hereunder,
the contractor shall proceed diligently with performance
and in accordance with the Contracting Officer's
decision.
* * * * * * * * * *
14. Inspection and Tests.
* * * * * * * * * *
(b) The contractor shall provide and maintain an
inspection system acceptable to the GPO covering
supplies under the contract and shall tender to the
Government for acceptance only supplies that have been
inspected in accordance with the inspection system and
have been found by the contractor to be in conformity
with contract requirements. . . .
(c) The Government has the right to inspect and test all
supplies called for, to the extent practicable, at all
places and times, including the period of manufacture,
and in any event before acceptance. The Government
shall perform inspections and tests in a manner that
will not unduly delay performance and assumes no
contractual obligation to perform any inspection and
test for the benefit of the contractor unless
specifically set forth elsewhere.
* * * * * * * * * *
(f) The Government has the right either to reject or to
require correction of nonconforming supplies. Supplies
are nonconforming when they are defective in material or
workmanship or are otherwise not in conformity with
requirements. The Government may reject nonconforming
supplies with or without disposition instructions.
* * * * * * * * * *
(h) If the contractor fails to promptly remove, replace,
or correct rejected supplies that are required to be
removed or replaced or corrected, the Government may
either:
(1) by contract or otherwise, remove, replace, or
correct the supplies and charge the cost to the
contractor, or
(2) terminate for default as provided in article 20
"Default".
* * * * * * * * * *
(j) The Government shall accept or reject supplies as
promptly as practicable after delivery, unless otherwise
provided. Government failure to inspect and accept or
reject the supplies shall not relieve the contractor
from responsibility, nor impose liability on the
Government, for nonconforming supplies.
(k) Inspections and tests by the Government do not
relieve the contractor of responsibility for defects or
other failures to meet requirements before acceptance.
Acceptance shall be conclusive, except for latent
defects, fraud, gross mistakes amounting to fraud, or as
otherwise provided.
15. Warranty.
Definitions. "Acceptance," as used in this article means
the act of an authorized representative of the
Government by which the Government assumes for itself,
or as an agent of another, ownership of existing
supplies, or approves specific services as partial or
complete performance.
"Correction," as used in this article, means the
elimination of a defect.
"Supplies," as used in this article means the end
item furnished by the contractor and related
services. The word does not include data.
(a) Contractor's obligations. (1) Notwithstanding
inspection and acceptance by the Government of supplies
furnished or any condition concerning the conclusiveness
thereof, the contractor warrants that for 120 days from
the date of the check tendered as final payment-
(i) All supplies furnished will be free from
defects in material workmanship and will conform
to all requirements; and
(ii) The preservation, packaging, packing, and
marking and the preparation for, and shipment of
such supplies will conform with requirements.
(2) When return, correction, or replacement is
required, transportation charges and responsibility
for the supplies while in transit shall be borne by
the contractor. However, the contractor's liability
for the transportation charges shall not exceed an
amount equal to the cost of transportation by the
usual commercial method of shipment between the place
of delivery specified in the contract and the
contractor's plant, and return.
(3) Any supplies or parts thereof, corrected or
furnished in replacement under this clause, shall
also be subject to the terms of this article to the
same extent as supplies initially delivered. The
warranty, with respect to supplies or parts thereof,
shall be equal in duration to that in paragraph (a)
(1) above and shall run from the date of delivery of
the corrected or replaced supplies.
(4) All implied warranties of merchantability and
"fitness for a particular purpose" are excluded from
any obligation contained herein.
(b) Remedies available to the Government. (1) The
Contracting Officer or his/her authorized representative
shall give written notice to the contractor of any
breach of warranties in paragraph (a)(1) above within
120 days, unless otherwise specified, from the date of
the check tendered as final payment.
(2) Within a reasonable time after the notice, the
Contracting Officer may either-
(i) Require, by written notice, the prompt
correction or replacement of any supplies or parts
thereof (including preservation, packaging,
packing, and marking) that do not conform within
the meaning of paragraph (a)(1) above; or
(ii) Retain such supplies and reduce the contract
price by an amount equitable under the
circumstances.
(3) The rights and remedies of the Government
provided in this article are in addition to, and do
not limit, any rights afforded to the Government by
any other clause.
(4) Failure to agree on any of the determinations
made by the Contracting Officer pursuant to this
article shall be a dispute concerning a question of
fact within the meaning of article 5 "Disputes".
* * * * * * * * * *
20. Default.
(a)(1) The Government may, subject to paragraphs (c) and
(d) below, by written notice of default to the
contractor, terminate in whole or part if the contractor
fails to-
(i) Deliver supplies or to perform the services
within the time specified or any extension thereof; .
. .
* * * * * * * * * *
(b) If the Government terminates in whole or in part, it
may acquire, under the terms and in the manner the
Contracting Officer considers appropriate, supplies or
services similar to those terminated, and the contractor
will be liable to the Government for any excess costs
for those supplies or services. However, the contractor
shall continue the work not terminated.
(c) . . . [T]he contractor shall not be liable for any
excess costs if the failure to perform arises from
causes beyond the control and without the fault or
negligence of the contractor. Examples of such causes
include acts of God or of the public enemy, acts of the
Government in either its sovereign or contractual
capacity, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, and unusually
severe weather. In each instance, the failure to
perform must be beyond the control and without the fault
or negligence of the contractor.
* * * * * * * * * *
(f) The Government shall pay the contract price for
completed supplies delivered and accepted. The
contractor and Contracting Officer shall agree on the
amount of payment for manufacturing materials delivered
and accepted and for the protection and preservation of
the property. Failure to agree will be a dispute under
article 5 "Disputes." . . .
(g) If, after termination, it is determined that the
contractor was not in default, or that the default was
excusable, the rights and obligations of the parties
shall be the same as if the termination had been issued
for the convenience of the Government.
* * * * * * * * * *
24. Payments on Purchase Order.
(a) Payment will be made to the contractor upon
submission of a proper voucher . . . [with supporting
shipping and delivery documentation, as listed].
* * * * * * * * * *
(b) Checks tendered by GPO in payment of any invoice
submitted by the contractor, whether equal to or less
than the amount invoiced, are tendered as final payment.
Acceptance of payment of any check so tendered shall
operate as a bar to the assertion of any exceptions by
the contractor to the amount paid by GPO unless the
contractor notifies the Contracting Officer in writing
within 60 calendar days of the date of such check. Such
notice shall specify the exceptions taken to the sum
tendered, and the reasons therefor.
GPO Contract Terms, Contract Clauses, Arts. 5, 14, 15, 20 and 24.
2. On August 15, 1990, the Contracting Officer issued
Purchase Order K-1015 awarding the contract to the Appellant,
who had submitted a low bid of $471,120.00 (R4 File, Tabs B, C
and D).
3. The Appellant timely provided GPO with the required
12,000 prior-to-production samples required under the
specifications.9 Res. R., ¶¶ 4, 5; RPTC, p. 5. Thereafter,
all quality control tests on the prior-to-production samples
were performed by the FAA and GPO, and the samples were
approved without modification. Res. R., ¶¶ 8-12. By letter
dated September 21, 1990, the Respondent notified the
Contractor that based on the FAA's review and approval of the
prior-to-production samples, it was authorized to begin
production and delivery of the flight strips. Res. R., ¶ 13;
App. Exh. No. 1.10
4. Between October 22, 1990 and November 21, 1990, the
Appellant produced and shipped the entire ordered quantity of
312,000,000 flight strips to the FAA's facility in Oklahoma
City, Oklahoma, in 17 separate installments (thus completing
deliveries before the contract due date). Res. R., ¶¶ 15, 18;
RPTC, p. 3. However, while production run samples were
submitted with each shipment, the samples were never subjected
to quality control tests, either by the FAA or GPO, on receipt
of the delivery. Res. R.; ¶¶ 21, 22; RPTC, p. 5. After all
deliveries were completed, the Respondent paid the Appellant
the contract price in two separate checks, dated December 10,
1990 and December 19, 1990, in the amounts of $223,238.40 and
$246,678.00; respectively. Res. R., ¶ 24; RPTC, p. 5.
5. After the Appellant had been paid, the FAA examined the
shipments of flight strips.11 RPTC, p. 3. Although the dates
of inspection for all of the deliveries is not known, the
Respondent admits that the following shipments were inspected
on the dates indicated:
SHIPMENT DATE
Shipment No. 3 January 15, 1991
Shipment No. 4 January 25, 1991
Shipment No. 5 February 1, 1991
Shipment No. 6 February 20, 1991
Shipment No. 7 February 20, 1991
Shipment No. 10 February 20, 1991
Shipment No. 11 November 30, 1990
Shipment No. 12 February 20, 1991
Shipment No. 13 February 20, 1991
See, Res. R., ¶ 23. Based on its examination, the FAA concluded
that the Appellant's flight strips had several critical quality
defects; i.e., misalignment of the left and right pinfeed holes
(the centers of the left and right pinfeed holes were not
parallel to the horizontal perforation); and (2) the 1/4 inch
space between the bottommost horizontal rule and the horizontal
perforation varied from .2188 inch to .2812 inch (a variation of
plus/minus .0312), whereas the tolerance for this criterion was
plus/minus .008 inch (R4 File, Tabs E and M). RPTC, p. 3.
Consequently, by "Speed Memo" dated January 22, 1991, the FAA
notified GPO of its intention to reject the entire order of
312,000,000 flight strips (R4 File, Tab E). Res. R., ¶¶ 26, 27;
App. Exh. No. 2.
6. On receipt of the FAA's "Speed Memo", the Respondent
conducted its own random inspection of flight strip samples,
including production-run samples sent to GPO by the Appellant
and additional samples supplied by the FAA, and concluded that
the forms met the contract specifications. Res. R., ¶¶ 28-30.
In light of these findings, the Contracting Officer determined
that he could find no contractual basis for requiring the
Appellant to reprint the flight strips, and so informed the
FAA in a letter dated February 14, 1991. Res. R., ¶¶ 31-33;
App. Exh. No. 3. The Contracting Officer told the FAA, in
pertinent part:
The samples you provided were inspected in accordance
with the specifications. We also inspected 15 separate
boxes of 6,000 flight strips each that were submitted by
the contractor and represent the 15 incremental
shipments made during the period of October 22 through
November 19, 1990.
All the dimensions of the individual forms were checked
to ensure they were in accordance with the
specifications. A four foot section of the forms from
each of the sample lots and from the 15 boxes was
checked to ensure it was in accordance with the pinfeed
holes [sic] requirements. In addition, the 15 boxes of
forms were inspected for other types of defects such as
scumming, hickies, plate scratches and ink spots.
The result of the inspection is that the individual
forms are within the specified dimensional tolerances.
The four foot section of forms does reveal a
misalignment between the left and right pinfeed holes,
but this misalignment does not exceed 1/32", which is
within the limits of the specifications. An occasional
plate scratch or ink spot was found in some of the 15
boxes of forms but these defects are not sufficient to
warrant rejection.
Accordingly, we can find no contractual basis upon which
we could require the contractor to reprint the forms.
We regret any dissatisfaction you may have with the
order. However, the circumstances preclude any action
against the contractor.
See, App. Exh. No. 3. [Emphasis added.]
7. There is nothing in the record to disclose what
transpired between the Respondent and the FAA about this
matter over the next two months. However, on April 11, 1991,
the Contracting Office wrote the following letter to the
Appellant:
This is to advise you that we have received a complaint
from our client regarding the flight progress strips
procured from your firm on Jacket 762-776, Purchase
Order K-1015.
The samples are being inspected in accordance with the
specifications. The list of concerns includes items
such as misalignment between the left and right pinfeed
holes, ink spots and plate scratches.
Upon completion of our inspection, we will advise you of
our findings.
See, R4 File, Tab F; App. Exh. No. 4. This letter, notifying the
Contractor of FAA's complaint about the quality of the flight
strips, was the first inkling the Appellant had there was a
problem with the forms it delivered (R4 File, Tab L, p. 2). Res.
R., ¶¶ 34-36; RPTC, p. 5.
8. Early in May 1991, after receiving the Contracting
Officer's letter, the Appellant and the DRPPO talked several
times about the problems with the flight strips. As a result
of their discussions, the parties arranged a joint on-site
inspection of the forms at the FAA warehouse on May 13, 1991
(R4 File, Tab H).12 Mr. David Gusler, who represented the
Contractor for the purpose of this inspection, participated in
the examination of sample flight strips at the FAA's facility,
and he also took samples from the warehouse back to the
Appellant's plant for an independent inspection (R4 File, Tabs
H and I). Based on its own examination, the Appellant wrote
to Duane Kemmett, the DRPPO's representative, on May 23, 1991,
disagreeing with the Respondent's conclusion that the forms it
shipped were defective (R4 File, Tab J). In that regard, the
Contractor stated, in pertinent part:
. . . [W]e have concluded the following:
1. Our product conforms to the copy submitted to us for
duplication by the G.P.O. at the time the order was
entered in August of 1990.
2. Our product is of the same quality as the Prior to
Production samples that we produced for approval and
shipped to the G.P.O. in Dallas, Texas on [September 5,
1990]. These samples were approved in writing by the
G.P.O. on [September 24, 1990].
3. Our product is of the same acceptable quality as
previous flight strip orders that we have produced for
the FAA. The last order produced by us prior to the
order in question was in March of 1989. As you are
probably aware, we have been producing this form or some
variation of it for over 20 years. To our knowledge, we
have never received a complaint until now. . . .
* * * * * * * * * *
After careful examination of all factors, we see no
reason why our product will not run efficiently. [We]
understand that the FAA has been using our forms for
several months at various installations and that
approximately [1/3] of the forms in question have been
used.
* * * * * * * * * *
After discussing this situation, we feel that the
problem may well be with the FAA printers not being
adjusted properly. We also feel that any printer that
is in a reasonably good state of repair and set properly
should run our forms without problems.
See, R4 File, Tab J, pp. 1-2.
9. On June 17, 1991, the Contracting Officer sent a reply
letter to the Appellant, in which he said, in pertinent part:
The flaws detected during the inspection process are
such that individual flight strips do not meet
specifications. Additionally, the accumulative effect
of the flaws could result in the misinterpretation of
data imprinted on the flight strips with the possibility
of catastrophic consequences. These flaws were pointed
out to Mr. David Gusler of your Eden Division during his
inspection of the flight strips in Oklahoma City.
Although multiple inspections by GPO and the FAA bear
out our conclusion that the job is defective, a critical
requirement of the Government forced the FAA to use some
of the rejectable strips. When issuing these strips,
FAA incurred additional expense to include warnings to
all users of the strips to be alert to the defects they
contain and take appropriate precautions. In all,
90,240,000 flight strips were issued with user warnings
included. The remaining 221,760,000 flight strips are
rejected and must be replaced. . . .
The replacement flight strips may be shipped
incrementally but only as full trailer loads. Complete
shipment must be accomplished by August 26, 1991.
See, R4 File, Tab K. [Emphasis added.] See also, Res. R., ¶ 38;
App. Exh. No. 5; RPTC, pp. 3, 5.
10. Following this exchange of letters, all of the parties-
the Appellant, the FAA and GPO-corresponded and met several
times about the complaints with the flight strips. Res. R., ¶
39; App. A., ¶ 20. Eventually, on June 26, 1991, the
Appellant wrote another letter to the Contracting Officer,
affirming its position in the dispute, and stating, in
pertinent part:
1) the initial "prior-to-production" samples were in
compliance with the specification and so approved by
letter of September 21, 1990;
2) after final shipment in November of 1990, the
Government inspected and accepted all the shipments by
making final payment on this purchase order in December
1990;
3) the FAA utilized approximately 90,000,000 of these
forms and experienced some difficulty but has been
unable to define the cause and still has not identified
to date precisely how the material supplied by Vanier
Graphics did not meet the specification; and
4) the specification is quite clear as to how these
materials were to be inspected, sampled an accepted or
rejected upon delivery, not months later while in use at
various FAA locations.
It is Vanier Graphics' position, therefore, that Vanier
Graphics has performed within the terms and conditions
of the contract, has delivered this order in its
entirety in a timely fashion in compliance with the
specification, and has no further contractual obligation
to the Government Printing Office under this purchase
order. Furthermore, the Government has accepted all
shipments and has no contractual right to reject these
materials as alluded to in the letter of June 17, 1991.
Should the Government not utilize these forms and
dispose of them in any manner, it does so at its own
risk and Vanier Graphics denies any responsibility for
the results of such action
See, R4 File, Tab L, pp. 3-4. [Original emphasis.]
11. Thereafter, by letter dated August 13, 1991, the
Contracting Officer rejected the balance of the ordered
forms-221,760,000 flight strips-and instructed the Appellant
to reprint them by October 15, 1991, at no cost to the
Government (R4 File, Tab M). Res. R., ¶ 40; RPTC, p. 3.
After reiterating the defects found in the forms by the FAA in
its warehouse inspections, the Contracting Officer further
stated:
When we reviewed the prior-to-production samples your
firm submitted, we did not find these defects. If the
production run had duplicated the prior-to-production
samples, the order would be acceptable. However, your
firm has failed to follow the specifications or to
understand that the tolerances are critical. Page 1 of
the specifications explicitly states "Read carefully-
this specification has been extensively revised". Your
firm was required to create the forms in accordance with
the drawing in the specifications. Previous production
of this form by your firm is not relevant to this order.
. . . [T]he Contracting Officer has determined that you
are to reprint the remaining rejected 221,760,000 flight
strips, at no additional expense to the Government.
Complete shipment is required by October 15, 1991.
Disposition of the rejected forms will be at your
expense. . . .
This is the final decision of the Contracting Officer.
You may appeal this decision to [the Board] . . . within
90 days from the date you receive this decision . . .
See, R4 File, Tab M, pp. 1, 2. [Emphasis added.] It is self-
evident that the letter sent to the Appellant more than 120 days
after final payment of the contract price. App. A., ¶ 19.
12. It is undisputed that the Contractor did not reprint the
rejected flight strips. RPTC, p. 3. Neither did the
Appellant immediately appeal the Contracting Officer's
decision to the Board. Instead, the record shows that after
August 13, 1991, the parties continued their efforts to
resolve the matter. Res. R., ¶ 41; App. A., ¶ 21. Indeed, in
October 1991, the Contracting Officer agreed to contact the
FAA to propose another joint inspection of the flight strips.
Res. R., ¶¶ 42-43; App. A., ¶ 21. However, on December 24,
1991, without any further action on the joint inspection
proposal, the Contracting Officer issued a "Partial
Termination Notice", defaulting the contract because of the
Appellant's "inability to produce the forms in accordance with
the specifications[.]" (R4 File, Tab N).13 Res. R., ¶¶ 44,
47; RPTC, p. 3-4.
13. The record reveals that even after the Contracting
Officer's default termination decision, the parties continued
to discuss the possibility of a joint inspection of the flight
strips, but negotiations broke off because of GPO's insistence
that the Contractor "forfeit its rights under the contract"
(R4 File, Tabs O, P, Q, R, T, U, and V). App. A., ¶ 21.
Accordingly, by letter dated March 11, 1992, the Appellant
timely appealed the Contracting Officer's default decision to
the Board (R4 File, Tab W).
II. APPELLANT'S MOTION
The Appellant's Motion is based on a very simple predicate,
namely, that GPO's rejection of the flight strips and the
direction to replace them, is untimely. Motion, p. 4. The
Contractor contends both events occurred approximately six
months after it had completed deliveries under the contract
and final payment had been made by the Respondent. Motion,
pp. 4-5. Consequently, assuming arguendo that the forms were
defective and the Appellant refused to comply with the
Contracting Officer's direction to reprint them, there is no
basis for a default termination under the terms of the
contract, as well as settled principles of law. Motion, p. 5.
The Appellant relies on the "Inspection and Tests," "Warranty"
and "Payment on Purchase Order" clauses of the contract, to
support the argument that GPO itself failed to meet its
responsibilities under the contract by failing to promptly
accept or reject the flight strips within the warranty period,
and therefore the final payment check issued to the Contractor
more than 120 days prior to rejection of the forms effectively
extinguished the Government's right to do so. Motion, pp. 5-6
(citing, GPO Contract Terms, Contract Clauses, Arts. 14, 15
and 24. Also citing, Industrionics, Inc., GPO CAB 5-82
(October 21, 1982), Sl. op. at 4, 1982 Westlaw 122,516, at 2
(GPOBCA);14 Automated Datatron, Inc., GPOBCA 25-87 and 26-87
(April 12, 1989), Sl. op. at 13, 1989 Westlaw 384,974, at 5
(GPOBCA); DuBois Construction Corporation v. United States, 98
F.Supp. 590, 598, 120 Ct.Cl. 139 (1951); Poole Engineering &
Machine Company v. United States, 57 Ct.Cl. 232, 234 (1922)).
In addition, the Appellant believes that when the Contracting
Officer informed the FAA, on February 14, 1991, that there was
no contractual basis for requiring a reprint of the flight
strips, he was essentially acknowledging the acceptance of the
forms. Motion, p. 6 (citing, GPO Contract Terms, Contract
Clauses, Art. 15; App. Exh. No. 3). Thus, the Contractor also
contends that the facts of this case show that GPO waived any
right it may have had to reject the flight strips and default
the contract. Id.
Finally, the Appellant believes that the Respondent's reliance
on the "Warranty" clause to support its default decision is
misplaced, because GPO did not comply with the requirements of
that clause. Id. The linchpin of the Contractor's view is
its contention that the Respondent never gave the Appellant
proper written notice of a breach of warranty. See, GPO
Contract Terms, Contract Clauses, Art. 15(b)(1). Two letters
were sent to the Appellant by the Contracting Officer about
this matter-the first on April 11, 1991, and the other on June
17, 1991 (R4 File, Tabs F and K). In that regard, the
Contractor argues that the "rejection" letter of June 17,
1991, was simply too late to invoke any of the Respondent's
rights under the "Warranty" clause. Motion, p. 7. As for the
Respondent's letter of April 11, 1991, which was admittedly
sent within the warranty period,15 the Appellant contends that
it did not meet the minimal requirements for an effective
notice of a breach of warranty, since no mention was made of
the "Warranty" clause, and only talked about the FAA's
"complaint" and "concerns", rather than any specific
defects.16 Motion, pp. 7-8 (citing, Oswald Schicker
Manufacturing Company, ASBCA No. 16836, 72-2 BCA ¶ 9,614).
Therefore, the Contractor believes that the undisputed
material facts in this case entitles it to summary judgment.17
Motion, p. 8.
The Respondent also relies on the "Warranty" clause to support
its position, but naturally sees matters differently than the
Appellant.18 In that regard, the Respondent believes that the
Contracting Officer's April 11, 1991, letter was sufficiently
detailed to satisfy the clause's notice requirements. Res.
Opp., p. 3. Indeed, the Contracting Officer specifically
states that the intention of his April 11, 1991, letter was to
"place Vanier on notice of the defects . . . , and advise them
that additional inspections would be undertaken." See, Res.
Opp., Wildbrett Declaration, ¶ 4. Under the traditional view
attached to warranty clauses, the Appellant's promised, in
effect, that it would furnish conforming supplies,
notwithstanding the Government's rights concerning inspection
and acceptance.19 Res. Opp., p. 4. Thus, the keystone of the
Respondent's position is the well-settled doctrine of public
contract law which entitles the Government to strict
compliance with its contract specifications. Res. Opp., p. 4
(citing, Jefferson Construction Co. v. United States, 151
Ct.Cl. 75 (1960); Red Circle Corporation v. United States, 185
Ct.Cl. 1, 8 (1968); American Electric Contracting Corporation
v. United States, 579 F.2d 602, 608 (1978); Dependable
Printing Company, Inc., GPO BCA 5-84 (September 12, 1985)).
The strict compliance rule is enforced either by rejecting the
defective product, or if the Government deems it in its best
interest, accepting the nonconforming supplies at a discounted
price. Res. Opp., pp. 4-5. Acceptance or rejection of a
nonconforming product is solely within the discretion of the
procuring agency, and the Government cannot be compelled to
accept a defective product at a reduced price, even if the
defects are relatively minor. Res. Opp., p. 5 (citing, Famous
Model Company, Inc., ASBCA No. 12526, 68-1 BCA ¶ 6,902; Cherry
Meat Packers, Inc., ASBCA No. 8974, 1963 BCA ¶ 3,937). From
this statement of "black letter" law, the Respondent reasons
that it had the right to obtain the exact supplies for which
it bargained, and to assert its remedies under the "Warranty"
clause when they were not delivered. Id. (citing, Wisconsin
Machine Corporation, ASBCA No. 18500, 74-1 BCA ¶ 10,397, at
49,096-97.
The Respondent argues that all that is required to invoke
GPO's "Warranty" clause is for the Contracting Officer to
issue a written notice to the Contractor advising of a breach
of warranty within 120 days of the date of final payment. Id.
(citing, GPO Contract Terms, Contract Clauses, Art. 15(b)(1)).
The Respondent contends that the Contracting Officer's letter
of April 11, 1991, which informed the Appellant that based on
a complaint from the FAA, its printed product appeared to be
defective, and that the results of a complete inspection would
be forthcoming (R4 File, Tab F), satisfied the requirements of
the "Warranty" clause. Id. In the Respondent's view, the
letter placed the Appellant on notice that the forms contained
a defect "in material or workmanship" or were not in
compliance with contract specifications; nothing more was
required. Res. Opp., p. 6 (citing, Utility Trailer Sales
Company, ASBCA No. 4689, 58-2 BCA ¶ 1,948, mot. for reconsid.
denied, 59-1 BCA ¶ 2,085). Furthermore, the Respondent
believes that the case cited by the Appellant as an example of
the degree of specificity required in a notice of breach of
warranty, Oswald Schicker Manufacturing Company, supra, 72-2
BCA ¶ 9,614, while dealing primarily with the timeliness of
the contracting officer's written notice, equally supports
GPO's position that the amount of detail required by the
notice is something less than that insisted on by the
Contractor.20 Id. (citing, Oswald Schicker Manufacturing
Company, supra, 72-2 BCA ¶ 9,614, at 44,941). See also,
Brown's Van and Storage Company, ASBCA No. 34258, 89-1 BCA ¶
21,251; Phoenix Steel Container Company, Inc., ASBCA No.
9987, 66-2 BCA ¶ 5,814; National Carbon, 53 ASBCA No. 1310.
Finally, the Respondent contends that contrary to the
Appellant's belief, the Government did not waive its right to
default the contract by taking an unreasonable time to select
its remedy under the "Warranty" clause (have the Contractor
replace the defective flight strips), once its provisions had
been invoked. Res. Opp., p. 7. See, GPO Contract Terms,
Contract Clauses, Art. 15(b)(1). In that regard, the
Respondent notes that the time between April 11, 1991, and
June 17, 1991, was spent by the FAA, GPO and the Appellant
inspecting and testing the flight strips to find out
definitely if they met the specifications, and working with
the Contractor to resolve the problem once it was determined
they did not. Id. (citing, Jung Ah Industrial Company, ASBCA
No. 22632, 79-1 BCA ¶ 13,643, mot. for reconsid. denied, 79-2
BCA ¶ 13,916). The Respondent believes that two months was
not an unreasonable amount of time for this purpose, and for
deciding on the appropriate remedy. Res. Opp., p. 8.
Accordingly, the Respondent argues that the Appellant is not
entitled to judgment as a matter of law, and urges the Board
to deny the Motion. Id.
III. RESPONDENT'S CROSS MOTION
Although the Respondent opposes the Appellant's Motion
primarily on "strict compliance" principles, its Cross Motion
takes a totally different tack in seeking judgment for its
cause as a matter of law.21 While the reason given for
defaulting the Appellant's contract was the failure to produce
flight strips conforming to the contract specifications (R4
File, Tab N), the Respondent seeks summary judgment on the
ground that the Contractor's refusal to reprint the forms, as
directed by the Contracting Officer in his final decision of
August 13, 1991 (R4 File, Tab M), constitutes a legitimate
reason for default, in and of itself.22 Cross Motion, p. 3.
According to the Respondent, the law requires a contractor to
continue to follow the Contracting Officer's instructions
regarding performance while a dispute is pending, and its
failure to do so will sustain a default decision without
regard to the merits of the underlying dispute. Cross Motion,
pp. 3-4 (citing, Sterling Electronics, Inc., ASBCA No. 8450,
1964 BCA ¶ 4,092; James E. White, PSBCA No. 1022, 82-2 BCA ¶
15,896). The condition precedent for application of the rule
is the issuance of a final decision by the Contracting
Officer, directing the contractor's continued performance.
Cross Motion, p. 4 (citing, Fraass Surgical Manufacturing
Company v. United States, 505 F.2d 707 (Ct.Cl. 1974); Zindell
Explorations, Inc. v. United States, 427 F.2d 735 (Ct.Cl.
1970).
The Respondent notes that GPO's "Disputes" clause applies this
same principle to GPO contracts. Cross Motion, pp. 4-5
(citing, GPO Contract Terms, Contract Clauses, Art. 5(d)).
Furthermore, the Board and its predecessor ad hoc boards have
upheld the doctrine of "continued performance" by a contractor
while an appeal is pending, in numerous cases. Cross Motion,
pp. 5-7 (citing, The American Press, Inc., GPOCAB 17-84
(January 4, 1991), Sl. op. at 14; Stabbe Senter Press, GPO BCA
13-85 (May 12, 1989), Sl. op. 47-48; Nor Cal Trade School of
Offset Printing, GPOBCA 1-85 (September 12, 986), Sl. op. at
9; ATC Decal Company, GPOCAB 3-81 (July 14, 1981), Sl. op. at
6; Brenner Printing Company, GPOBCA 3-80 (1980), Sl. op. at
11. See also, Timsco, Inc., GPOCAB 10-78 (July 24, 1979)).
In addition, GPO's "Inspection and Tests" clause allows the
Respondent to default a contractor who fails to replace or
correct rejected supplies. Cross Motion, p. 7 (citing, GPO
Contract Terms, Contract Clauses, Art. 14(h)(2)). Of course,
a contractor must be given a reasonable time to comply with
the Contracting Officer's directions to replace or correct the
rejected items. Id. (citing, Shepard (1993), supra, Sl. op.
at 23.
The Respondent argues that in this case, the Contracting
Officer gave the Appellant clear instructions on August 13,
1991, to replace a portion of the defective flight strips (R4
File, Tab M). Cross Motion, p. 4. Instead of doing so, the
Contractor disputed the Contracting Officer's findings that
the flight strips were defective, and made repeated proposals
to the Contracting Officer (R4 File, Tabs J, L, Q and T).23
Id. The Respondent believes that the Appellant was afforded
more than a reasonable opportunity to replace the forms, as
directed by the Contracting Officer. Cross Motion, p. 7.
Since the Contractor failed to do so, the Respondent contends
that it is entitled to summary judgment in its favor. Cross
Motion, p. 8.
The Appellant opposes the Respondent's Cross Motion on several
grounds.24 However, with regard to the specific contention
raised by the Respondent, namely that Contractor failed to
comply with the Contracting Officer's direction to reprint the
defective flight strips, the Appellant flatly denies it. App.
Opp., Attachment, Affidavit of John H. Horne, Esq., ¶ 2 (Horne
Affidavit). Furthermore, according to the Appellant,
throughout this period the parties continued to work toward an
equitable resolution of this matter, and indeed, the
Contracting Officer himself kept changing the reprint
deadlines. App. Opp., p. 11; Horne Affidavit, ¶¶ 2-4. The
Contractor notes that other appeals boards have repeatedly
overturned precipitous default terminations effected in the
midst of such a dialogue. Id. (citing, Delfour, Inc., VABCA
Nos. 2049, 2215, 2539, 2540, 89-1 BCA ¶ 21,394, at 107,855-58;
Engineering & Professional Services, Inc., ASBCA No. 39164,
1994 ASBCA LEXIS 48, at 14-15). Accordingly, the Appellant
reaffirms its own right to summary judgment, and asks the
Board to deny the Respondent's Cross Motion, as without merit.
App. Opp., p. 12.
IV. DECISION
There is nothing in the Board Rules expressly providing for
motions for summary judgment.25 However, the Board has
traditionally entertained such motions, even in the absence of
such an express authorization. See, e.g., RBP Chemical
Corporation, GPO BCA 4-91 (January 23, 1992); Castillo
Printing Company, GPO BCA 10-90 (May 7, 1991); International
Lithographing, Inc., GPO BCA 18-88 (February 21, 1990). In
deciding summary judgment motions, the Board is guided by Rule
56 of the Federal Rules of Civil Procedure. RBP Chemical
Corporation, supra, Sl. op. at 17-18; Castillo Printing
Company, supra, Sl. op. at 22. Accord, Christie-Willamette,
NASA BCA 283-4, 87-3 BCA ¶ 19,981 (citing, Astro Dynamics,
Inc., NASA BCA ¶ 476-1, 77-1 BCA ¶ 12.230); Automated
Services, Inc., EBCA Nos. 386-3-87, 391-5-87, 87-3 BCA ¶
20,157.
Two years ago, in RBP Chemical Corporation, a summary
proceeding involving a fact situation practically identical to
the circumstances of this case, the Board set forth, in
detail, the principles which it would apply in ruling on
summary judgment motions. In that regard, the Board stated,
in pertinent part:
In ruling on motions for summary judgment, this Board
applies the rule which permits summary judgment if the
pleadings, the Rule 4 [F]ile, the results of any
discovery, and affidavits (when submitted) show that
there is no genuine issue of any material fact and the
moving party is entitled to judgment as a matter of law.
See, Castillo Printing Company, GPO BCA 10-90 (May 7,
1991), Sl. op. at 22. FED. R. CIV. P. 56(c). Accord,
Ite, Incorporated, NASA BCA No. 1086-6, 88-1 BCA ¶
20,269; R & D Associates, ASBCA No. 30738, 30750, 86-3 ¶
19,062.
* * * * * * * * * *
This Board regards a default termination as a drastic
action, which should only be taken for good cause and on
the basis of solid evidence.26 See, e.g., Stephenson,
Inc., supra, Sl. op. at 19. Accord, Mary Rogers Manley
d/b/a Mary Rogers Real Estate, HUDBCA No. 76-27, 78-2
BCA ¶ 13,519; Avco Corporation, Avco Electronics
Division, NASA BCA No. 869-18, 76-1 BCA ¶ 11,736;
Decatur Realty Sales, HUDBCA No. 75-26, 77-2 BCA ¶
12,567. Similarly, the Board also recognizes that a
summary judgment proceeding is, by its nature, a
"drastic device" for disposing of litigation.27 See,
Castillo Printing Company, supra, Sl. op. at 20 (citing,
IBM Poughkeepsie Employees Federal Credit Union v. Cumis
Insurance Society, Inc., 590 F.Supp. 769, 771
(D.S.D.N.Y. 1984); Jaroslawicz v. Seedman, 528 F.2d 727,
731 (2d Cir. 1975)). Nonetheless, summary judgment is
appropriate if there is no genuine issue of any material
fact in the record.28 As recently explained by the
Board:
Under Rule 56(c) of the Federal Rules of Civil
Procedure, courts are instructed to grant a motion
for summary judgment if the pleadings and supporting
affidavits and other submissions "show that there is
no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law." FED. R. CIV. P. 56(c). Thus, the principal
judicial inquiry required by Rule 56 is whether a
genuine issue of material fact exists. [Footnote
omitted.] Stated otherwise, on a motion for summary
judgment, a court cannot try issues of fact; it can
only determine whether there are issues to be tried.
See, e.g., IBM Poughkeepsie Employees Federal Credit
Union v. Cumis Insurance Society, Inc., 590 F.Supp.
at 771 (citing, Schering Corporation v. Home
Insurance Co., 712 F.2d 4, 9 (2d Cir. 1983). Is no
such issue exists, the rule permits the immediate
entry of judgment. See, e.g., Reingold v. Deloitte
Haskins and Sells, 599 F.Supp. 1241, 1261 (D.S.D.N.Y.
1984); United States v. ACB Sales and Service, Inc.,
590 F.Supp. 561 (D. Ariz. 1984). [Original
emphasis.]
Castillo Printing Company, supra, Sl. op. at 21-22.
As indicated, the Board's function in deciding a motion
for summary judgment is not to resolve any questions of
material fact, but only to ascertain whether any such
questions exist. Id. See, also, John's Janitorial
Services, Inc., ASBCA No. 34234, 90-3 BCA ¶ 22,973
(citing, General Dynamics Corporation, ASBCA Nos. 32660,
32661, 89-2 BCA ¶ 21,851); Ite, Incorporated supra, 88-1
BCA ¶ 20,269, (citing, B.S.A. Painting Company, Inc.,
ASBCA No. 32060, 87-1 BCA ¶ 19,367). It is not
necessary or appropriate to make explicit factual
findings for purposes of ruling on the motion. Id
(citing, Lemelson v. TRW, Inc., 760 F.2d 1254, 1260
(Fed. Cir. 1985); Pioneer Services, Inc., NASA BCA Nos.
578-9, 578-10, 81-2 BCA ¶ 15,164).
. . .[T]he burden is on the party moving for summary
judgment to demonstrate that there is no genuine issue
as to any material fact and that it is entitled to
judgment as a matter of law.29 Id. See, e.g., Adickes
v. S. H. Kress & Company, 398 U.S. 144, 157 (1970);
Rodway v. Department of Agriculture, 482 F.2d 722 (D.C.
Cir. 1973); Weisberg v. Department of Justice, 438
F.Supp. 492 (D.D.C. 1977). Furthermore, as the
Appellant recognizes, before a court will grant the
motion it must be satisfied that the truth is clear and
any doubt will be resolved against the movant. Id.
(citing, Adickes v. S. H. Kress & Company, supra, 398
U.S. 144, 157). See also, Poller v. Columbia
Broadcasting System, Inc., 368 U.S. 464 (1962); Union
Carbide Corporation v. American Can Company, 724 F.2d
1567, 1571 (Fed. Cir. 1984); Washington v. Cameron, 411
F. 2d 705 (D.C. Cir. 1969); B & A Electric Company,
Inc., ASBCA No. 33667, 87-1 BCA ¶ 19,606. Essentially,
this means that the record evidence in summary judgment
proceedings is construed in favor of the party against
whom the motion is raised, and the non-mover receives
the benefit of all favorable inferences that can be
drawn from it. See, e.g., United States v. General
Motors Corporation, 518 F.2d 420, 442 (D.C. Cir. 1975);
Federal Savings and Loan Insurance Corporation v.
Williams, 599 F.Supp. 1184, 1192 (D.Md. 1984); Turner v.
United States, 553 F.Supp. 347, 349 (D.Va. 1982);
Weisberg v. Department Justice, 438 F.Supp. 492 (D.D.C.
1977).
* * * * * * * * * *
Even though the nonmoving party in summary judgment
proceedings receives the benefit of all favorable
evidence and inferences, this does not mean that it has
no evidentiary responsibilities at all. Admittedly, the
burden on the nonmoving party is not a heavy one; it is
simple required to go beyond allegations in the
pleadings and designate specific facts in the record or
by affidavits to show there is a genuine issue to be
heard.30 See, e.g., McDonnell v. Flaharty, 636 F.2d 184
(7th Cir. 1980); United States v. Kates, 419 F.Supp. 846
(D.Pa. 1976); Upper West Fork River Watershed
Association v. Corps of Engineers, United States Army,
414 F.Supp. 908 (D.W.Va. 1976), affirmed 556 F.2d 576
(4th Cir. 1977), cert. denied 434 U.S. 1010 (1978). See
also, Ite, Incorporated, supra, 88-1 BCA ¶ 20,269. In
that regard, in deciding whether a genuine issue exists,
the court may not simply accept a party's statement that
a fact is challenged. See, Barmag Barmer
Maschinenfabrik AG v. Murata Machinery, Ltd., 731 F.2d
831, 835-36 (Fed. Cir. 1984) ("The party opposing the
motion must point to an evidentiary conflict created on
the record at least by a counter statement of a fact or
facts set forth in detail in an affidavit by a
knowledgeable affiant."). Furthermore, mere
protestations by the nonmoving party that material facts
are in dispute have been held insufficient to defeat a
motion for summary judgment. R & D Associates, supra,
86-3 ¶ 19,062. Cf., Central Mechanical Construction,
ASBCA No. 29431, 86-3 BCA ¶ 19,160. Accordingly, when
all of these principles are considered, it becomes clear
that the purpose of the summary judgment procedure is to
cut through the pleadings and distinguish substantial
issues from phantom issues raised only in the pleadings.
See, Ite, Incorporated, supra, 88-1 BCA ¶ 20,269
(citing, 6 J. MOORE, W. TAGGART & J. WICKER, MOORE'S
FEDERAL PRACTICE ¶ 56.15(2), (2d ed. 1985)).
RBP Chemical Corporation, supra, Sl. op. at 17-18, 20-26.
Unlike the situation in RBP Chemical Corporation, the Board
must deal with motions for summary judgment from both parties
in this case, instead of just one. However, the applicable
rules are no different. As recently stated by the United
States Court of Federal Claims in Bataco Industries, Inc.:
Both plaintiff and defendant, as moving parties, have
the burden of establishing that there are no genuine
material issues in dispute and that, as movant, they are
entitled to judgment as a matter of law. [Citation
omitted.] In opposing the other's motion, each party
has the burden of providing sufficient evidence, not
necessarily admissible at trial, to show that a genuine
issue of material fact indeed exits. [Citation
omitted.] If the non-movant's evidence is merely
colorable, or not sufficiently probative, summary
judgment may be granted. [Citations omitted.]
In resolving cross-motions, the court may not weigh the
evidence and determine the truth of the matter on
summary judgment. [Citation omitted.] Any evidence
presented by the opponent is to be believed and all
justifiable inferences are to be drawn in its favor.
[Citation omitted.] with respect to any facts that may
be considered as contested, each party, in its capacity
as the opponent of summary judgment, is entitled to "all
applicable presumptions, inferences and intendments."
[Citation omitted.]
That the parties, in their cross-motions, have
separately alleged the absence of genuine issues of
material fact, does not relieve the court of its
responsibility to determine the appropriateness of
summary disposition of the matter. . . . [T]he court
must evaluate each party's motion on its own merits and
drawing all reasonable inferences against the party
whose motion is being considered.
Bataco Industries, Inc. v. United States, supra, 29 Fed.Cl. at
322. See also, Baca v. United States, supra, 29 Fed.Cl. at
358-59.
In order for the Board to grant either the Motion or the Cross
Motion in this appeal, it would have to find that no genuine
issues of material fact exist in either case. That is, the
Board would have to be able to conclude, on the one hand, that
the default termination was justified, or on the other, that
the Contracting Officer's action was completely invalid.
However, when the above principles are applied in this
proceeding, the Board finds that neither party has carried the
day on its motion for summary judgment.
A. Appellant's Motion
From the outset, the Appellant has denied that its flight
strips were defective, and thus there was nothing in the
delivered product which needed to be cured; i.e., this is not
a case where the contractor admits the default but claims that
it is excusable. See, e.g., R.C. Swanson Printing and
Typesetting Company, GPO BCA 31-90 (February 6, 1992), Sl. op.
at 33-36, affirmed, Richard C. Swanson, T/A R.C. Swanson
Printing and Typesetting Co. v. United States, Cl.Ct. No.
92-128C (U.S. Claims Court, October 2, 1992);31 Chavis and
Chavis Printing, supra, Sl. op. at 13; Jomar Enterprises,
Inc., GPO BCA 13-86 (May 25, 1989), Sl. op. at 3-5. Instead,
the Appellant's principal defense in this case, and the basis
for its Motion, is its claim that notwithstanding any defects
which may have been found, the Government's failure to
promptly inspect and accept or reject the flight strips, or to
timely invoke the "Warranty" clause, extinguishes any further
obligations the Contractor might have had under the contract.
The controlling principles of law relating to acceptance and
warranties under Government contracts was recently set forth
in an excellent opinion by the General Services Board of
Contract Appeals (GSBCA) in ABM/Ansley Business Materials v.
General Services Administration, GSBCA No. 9367, 93-1 BCA ¶
25,246. In that case, the GSBCA held that the Government's
attempted use of the contract's "Warranty" clause to revoke
its acceptance of adhesive note pads supplied under an
estimated quantities contract was ineffective, because it was
unable to prove the necessary elements of a warranty claim.
In so ruling, the GSBCA stated, in pertinent part:
. . . [A]cceptance, under the terms of the contract, is
conclusive except in limited situations. [Finding
omitted.] This provision has been construed to mean
that the Government's acceptance of goods, even if
nonconforming, is final, and that "the contractor has no
further liability under the contract." California Power
Systems, Inc., GSBCA 7462, 86-1 BCA ¶ 18,598, at 93,367;
see also, Zebra Corp., GSBCA 4723, 80-2 BCA ¶ 14.484, at
71,392; Boston Pneumatics, Inc., GSBCA 3122, 72-2 BCA ¶
9,692, at 45,211-12. . . . There are two contractual
mechanisms by which the Government can avoid the
conclusiveness of acceptance. First, acceptance is not
deemed conclusive in the face of a showing of a "latent
defect, fraud, [or] gross mistake amounting to fraud."32
FAR 52.246-2(k). Second, the contract contains what
amounts to warranty provision in the QAMA which also
"overrides the conclusiveness of inspection and
acceptance of goods by the Government." Z.A.N. Co.,
ASBCA 25488, 86-1 BCA ¶ 18,612 (1985). . . .
* * * * * * * * * *
To avoid the conclusiveness of acceptance through
application of the warranty provision, respondent must
meet its burden to show that the warranty applied.
Camrex Reliance Paint Co., GSBCA 6166, 83-1 BCA ¶
16,485, at 81,958; Joseph Penner, GSBCA 4647, 80-2 BCA ¶
14,604, at 72,019. To do so, it must prove the three
elements of a warranty claim. First, GSA must show that
"furnishing the defective materials or workmanship was
the responsibility of the contractor." Joseph Penner,
80-2 BCA at 72,019. The Government need not be explicit
on this score-it is sufficient for it to show "by a
preponderance of he evidence, that defective material or
workmanship was the most probable cause of the failure
when considered with any other possible causes." Id. .
. . .
Second, respondent must show that "the required notice
was given within the time periods prescribed by the
warranty clause." Joseph Penner, 80-2 BCA at 72,019. .
. .
Finally, GSA must show that "it did not cause or
contribute to the failures or defects." Joseph Penner,
80-2 BCA at 72,019. Although the record gives us no
particular reason to conclude that GSA in any way harmed
the note pads, it is still GSA's burden to offer some
proof that it did not.
ABM/Ansley Business Materials v. General Services Administration,
supra, 93-1 BCA ¶ 25,246, at 125,748-49. See also, Globe
Corporation, ASBCA No. 45131, 93-3 BCA ¶ 25,968, at 129,141;
Pickett Enterprises, Inc., GSBCA Nos. 9472, 9890, 10051, 10102,
10426, 92-1 BCA ¶ 24,668, at 123,094; Air, Inc., supra, 91-1 BCA
¶ 23,352, at 117,109-10.
Applying the above principles in this proceeding, to prevail
on its Motion the Appellant, as the moving party, would have
to prove the negative of the three elements of a warranty
claim. FED.R. CIV.P. 56(c). That is, the Contractor would
have to show that: (1) if the flight strips were defective it
was not responsible for the problem; (2) the Respondent did
not give the required notice within the 120-day time period
prescribed by the "Warranty" clause; and (3) the Government
caused or contributed to the failure or defects in the flight
strips; e.g., improperly adjusted FAA printers were either
responsible for or contributed to the problems in running the
forms. See, RBP Chemical Corporation, supra, Sl. op. at 27.
Furthermore, the Contractor would have to prove all the
elements of its claim. See, Globe Corporation, supra, 93-3
BCA ¶ 25,968, at 129,141 (citing, Vi-Mil, Inc., ASBCA No.
16820, 75-2 BCA ¶ 11,435, at 54,482).
For the purpose of its Motion, the Appellant directs its
arguments solely at element (2). Hence, it was incumbent on
the Appellant in this proceeding to offer evidence to the
Board which would show not only that the flight strips had
been accepted by the Government, but also that the acceptance
was conclusive because the Respondent failed to assert its
rights under the "Warranty" clause in time. To meet its
burden of proof, the Appellant draws primarily on the
Respondent's admissions made during discovery, see, Motion,
p. 1, which it says establishes, inter alia, that: (1) the
Contractor made a timely delivery of the flight strips under
the contract; (2) the Government paid the contract price for
the forms with two checks issued in December 1991; (3) the
Government's receipt and retention of the flight strips, its
tender of final payment, and the Contracting Officer's letter
of February 14, 1991, informing the FAA that his inspection of
the forms found nothing wrong with them and thus there was no
contractual basis for requiring a reprint, constitutes implied
acceptance of the flight strips; and (4) the Contracting
Officer's letter of April 11, 1991, was not proper written
notice under the "Warranty" clause, and therefore, the
protection of that contract provision was not invoked by the
Respondent within the prescribed 120 days. In the Board's
view, this evidence is insufficient to carry the Appellant's
burden. First, acceptance of supplies cannot always be
imputed from the simple act of paying for them. See, Pickett
Enterprises, Inc., supra, 92-1 BCA ¶ 24,668, at 123,094;
Spectrum Leasing Corporation, GSBCA Nos. 7347, 7379, 7425-27,
7571, 90-3 BCA ¶ 22,984. Second, admissions against interest
are not always conclusive proof of an issue, but may only
raise a rebuttable presumption subject to additional evidence,
especially where, as here, the author of the admission
attempts to explain adverse statements made during discovery
in a subsequent affidavit submitted in opposition to a motion
for summary judgment. See, Blake Construction Company, Inc.,
ASBCA No. 36307, 90-2 BCA ¶ 22,889, at 114,941; Universal
Canvas, Inc., ASBCA No. 36141, 89-1 BCA ¶ 21,522, at 108,393.
Accord, Lindsey Logging/Brush Piling, AGBCA Nos. 90-144-,
90-215-1, 91-2 BCA ¶ 23,671; Thompson Entomological and Tree
Service, ASBCA No. 34518, 89-1 BCA ¶ 21,267.
The Respondent, on the other hand, has done all that is
required of it under the Federal procedural rules to oppose
the Motion. In particular, it has pointed to an evidentiary
conflict created on the record both by presenting its own
counter statement of facts and arguments, set forth in detail,
and by supporting them with a signed statement from the
Contracting Officer. See, RBP Chemical Corporation, supra,
Sl. op. at 28 (citing, Barmag Barmer Maschinenfabrik AG v.
Murata Machinery, Ltd., supra, 731 F.2d at 836). See also,
W.B. Huckabay Associates, Western Offshore Group, Inc., ASBCA
No. 44138, 93-2 BCA ¶ 25,676 (affidavit from nonmoving party-
summary judgment denied); Erie Tool Works, ASBCA Nos. 34811,
34881, 89-1 BCA ¶ 21,316 (affidavit from nonmoving party-
summary judgment denied). But cf., Mourning V. Family
Publishing Service, Inc., 411 U.S. 356, 362, fn. 16 (1973)
(summary judgment proper because respondent failed to
controvert prior admissions by affidavit); Snack Time Foods,
Inc. (dba Snack Time Vending), VABCA No. 3729, 93-2 BCA ¶
25,825 (no affidavit from nonmoving party-summary judgment
granted). First, the Respondent disputes the Appellant's
contention that the Government accepted the flight strips
simply by paying for them, on the ground that under GPO
contracts payment to the contractor only constitutes evidence
of delivery, not acceptance. GPO Contract Terms, Contract
Clauses, Art. 24. See, Res. Opp., p. 4, fn. 2; Wildbrett
Declaration, ¶ 11. Second, and perhaps more importantly, the
Respondent argues that even if acceptance had taken place, it
was timely revoked by the Contracting Officer's letter of
April 11, 1991 (R4 File, Tab F). See, Res. Opp., pp. 5-6;
Wildbrett Declaration, ¶ 4. In that regard, the Respondent
contends that the Contracting Officer's letter was sufficient
to place the Appellant on notice of the defects with the
flight strips and to assert the Government's rights under the
"Warranty" clause because it informed the Contractor that: (1)
the FAA had complained about defects in the flight strips; (2)
the forms were being inspected; and (3) the test results would
soon be known. In the Respondent's view, this information was
enough to inform the Appellant that the flight strips were
defective with respect to "material or workmanship" and that
the forms did not comply with the contract specifications.
Indeed, the Contracting Officer expressly states that his
letter was intended to "place Vanier on notice of the defects
. . . , and advise them that additional inspections would be
undertaken." See, , Wildbrett Declaration, ¶ 4. Since the
Contracting Officer's letter was sent to the Appellant within
the 120-day warranty period, the Respondent is satisfied that
the Government's rights were timely preserved.
Whether the Respondent's confidence about the Contracting
Officer's letter of April 11, 1991, is justified will have to
await a hearing in this matter. Suffice it to say, however,
the
Contracting Officer's affidavit is sufficient, in the Board's
view, to raise a question about what he meant to say and what he
actually said in that letter, and thus establish a genuine issue
of a material fact. In that regard, this situation is analogous
to the one faced by the Armed Services Board of Contract Appeals
(ASBCA) in Universal Canvas, Inc., supra, where, as here, a
contractor filed a motion for partial summary judgment, and the
contracting officer whose decision was challenged, submitted an
affidavit in opposition to the motion which raised an issue as to
the meaning of the language in his decision. In denying the
contractor's motion, the ASBCA opined:
. . . [W]e are once again presented with an author's
affidavit attempting to explain unusual language, . . .
Should the parties fail to settle this case and a
hearing be held, we can expect interesting cross
examination of the ACO and the contracting officer
regarding their use of language to manifest their
intent. However, at the present time it is clear that
there are genuine issues of material fact which must be
adjudicated before we can issue a decision.
Universal Canvas, Inc., supra, 89-1 BCA ¶ 21,522, at 108,393.
The Board could not agree more with the sentiments expressed by
the ASBCA.
Because the two central issues raised by the Motion-whether or
not the Government actually accepted the flight strips in the
first instance, and if not, whether or not its attempt to
revoke that acceptance by means of the contract's "Warranty"
clause was untimely-are in dispute, and the controversy is
clearly genuine, this appeal is inappropriate for summary
judgment on that basis alone. See, e.g., The Electronic
Genie, Inc., ASBCA Nos. 40535,41684, 41688, 91-2 BCA ¶ 23,713;
Infotec Development, Inc., ASBCA No. 31809, 88-2 BCA ¶ 20,737;
Gemo Construction Corporation, PSBCA No. 2343, 89-1 BCA ¶
21,293. Accordingly, the Motion is DENIED.33
B. Respondent's Cross Motion
By denying the Appellant's Motion, the Board is not compelled
to grant the Respondent's Cross Motion. It is well-settled
that: "[t]he fact that both parties have moved for summary
judgment does not meant that the [Board] must grant judgment
as a matter of law for one side or the other; summary judgment
in favor of either party is not proper if disputes remain as
to material facts." See, Harris Corporation, ASBCA No. 37940,
89-3 BCA ¶ 22,145, at 111,462 (citing, Mingus Constructors,
Inc. v. United States, supra, 812 F.2d at 1391). See also,
Bataco Industries, Inc. v. United States, supra, 29 Fed.Cl. at
322 ("Nor does the fact that inherently contradictory claims
are being presented mean that if one is rejected, the other
must be justified and therefore granted." Citing, Rains v.
Cascade Industries, Inc., 402 F.2d 241, 245 (3d Cir. 1968)).
This case is before the Board because the Contracting Officer,
after months of negotiating with the Appellant over a
resolution to the flight strip problem, partially defaulted
the contract. It is axiomatic that a default termination is a
drastic action which may only be taken for good cause and on
the basis of solid evidence. See, Hurt's Printing Company,
Inc., supra, Sl. op. at 13-14; Shepard (1993), supra, Sl. Op.
at 10; Stephenson, Inc., supra, Sl. op. at 19-20.
Furthermore, the burden of proving the basis for the default
is on the Government. See, Chavis and Chavis Printing, supra,
Sl. op. at 11 (and cases cited therein); Shepard (1993),
supra, Sl. Op. at 11; R.C. Swanson Printing and Typesetting
Company, supra, Sl. op. at 28. Accord, Lisbon Contractors v.
United States, 828 F.2d 759 (Fed. Cir. 1987). The contractor
has the burden of proving that the default was excusable.
See, Chavis and Chavis Printing, supra, Sl. op. at 11-12;
Shepard (1993), supra, Sl. Op. at 11. Accord, Switlik
Parachute Company v. United States, 216 Ct.Cl. 362 (1978);
J.F. Whalen and Company, AGBCA Nos. 83-160-1, 83-281-1, 88-3
BCA ¶ 21,066.
Under the "Default" clause in GPO contracts, the Contracting
Officer can, among other things, on written notice of default
to the contractor, terminate a contract, in whole or in part,
if the contractor fails to "[d]eliver the supplies or to
perform the services within the time specified or any
extension, thereof; . . .". GPO Contract Terms, Contract
Clauses, Art. 20(a)(1)(i). This provision not only applies to
late deliveries of supplies, see, Chavis and Chavis Printing,
supra, Sl. op. at 12-15; Jomar Enterprises, Inc., supra, Sl.
op. at 3-5, but also to the timely delivery of nonconforming
products.34 See, Shepard (1993), supra, Sl. op. at 19-23;
B.P. Printing and Office Supplies, GPO BCA 22-91 (February 5,
1993), Sl. op. at 24; Stephenson, Inc., supra, Sl. op. at
18-19. Accord, Kopier Produckte, ASBCA No. 29471, 85-3 BCA ¶
18,367; Meyer Labs, Inc., ASBCA No. 18347, 77-1 BCA ¶ 12,539.
In this case, the Contracting Officer terminated the
Appellant's contract for default because, in his view, the
flight strips produced and delivered by the Contractor did not
comply with the contract specifications (R4 File, Tab N).
However, the Respondent does not pursue a summary ruling on
that ground. Instead, the Cross Motion urges the Board to
enter judgment for the Respondent on the theory, well
supported in the case law, that the Contractor's refusal to
carry out the Contracting Officer's direction to reprint the
flight strips (R4 File, Tab M), constitutes a separate and
valid ground for default without regard to the merits of the
underlying dispute. Cross Motion, p. 3-4.
The essence of the so-called "continued performance" doctrine
is that a contractor's failure to comply with a Contracting
Officer's instructions during the pendency of a dispute
constitutes abandonment or a repudiation of the contract.35
Sterling Printing, Inc., supra, Sl. op. at 37-38 (citing,
Altina Trucking, PSBCA No. 3341, 93-3 BCA ¶ 26,256. Accord,
Twigg Corporation, NASA BCA No. 62-0192, 93-1 BCA ¶ 25,318; F
& D Construction Company, Inc., ASBCA No. 41441, 91-2 BCA ¶
23,983; A. N. Xepapas, AIA, VABCA No. 3087, 91-2 BCA ¶ 23,799;
Holt Roofing Company, Inc., GSBCA No. 8270, 91-1 BCA ¶ 23,361;
Kirk Casavan, AGBCA No. 76-192, 78-2 BCA ¶ 13,459). In
Sterling Printing, Inc., a recent decision, the Board, sua
sponte, sustained the default termination of a contract on the
very ground asserted by the Respondent in this case. In so
ruling, the Board described the parameters of the rule,
stating, in pertinent part:
In order to sustain a ["continued performance']
default . . . two things are required: (1) a clear
direction by the contracting officer; and (2) a
refusal by the contractor to proceed with
performance. See, Ascani Construction & Realty
Company, VABCA Nos. 1572, 1584, 83-2 BCA ¶ 16,635.
See also, Max M. Stoeckert v. United States, 183
Ct.Cl. 152, 391 F.2d 639 (1968); James W. Sprayberry
Construction, IBCA No. 2130, 87-1 BCA ¶ 19,645; G.W.
Galloway Company, ASBCA No. 17436, 77-2 BCA ¶ 12,640;
Pacific Devices, Inc., ASBCA No. 19379, 76-2 BCA ¶
12,179. . . . As the Veterans Administration Board
of Contract Appeals explained when it affirmed a
contracting officer's default termination decision on
anticipatory repudiation grounds:
[T]he existence of a dispute regarding contract
specifications does not excuse a refusal to perform.
Charles Bainbridge, Inc., ASBCA Nos. 15843, 16204,
72-1 BCA ¶ 9,351. The fact that the parties are
involved in a contract dispute does not justify
abandonment of the contract. Nasco Products Company,
VACAB Nos. 974, 1000, 72-2 BCA ¶ 9,556.
* * * * * * * * * *
A. N. Xepapas, AIA, supra, 91-2 BCA ¶ 23,799, at
119,178-79 (quoting, Eriez Construction, Inc., supra,
78-2 BCA ¶ 13,547 at 66,363). See also, Computer
Engineering Associates, VABCA No. 1596, 84-2 ¶ 17,246.
To support a default termination on the basis of
anticipatory repudiation by the contractor, the trier of
fact must find:
a "positive, definite, unconditional, and unequivocal
manifestation of intent . . . on the part of the
contractor . . . not to render the promised
performance . . . "
United States v. DeKonty Corporation, 922 F.2d 826, 828
(Fed. Cir. 1991) (citing, Cascade Pacific International
v. United States, supra, 773 F.2d at 293). See also,
James B. Beard, D.O., supra, 93-3 BCA ¶ 25,976, at
129,171; Altina Trucking, supra, 93-3 BCA ¶ 26,256, at
130,590-91. The Government has the burden of proving
that the contractor communicated an intent not to
perform in a positive, definite, unconditional and
unequivocal manner. James B. Beard, D.O., supra, 93-3
BCA ¶ 25,976, at 129,171 (citing, United States v.
DeKonty Corporation, 922 F.2d 826). See also, Sealtite
Corporation, GSBCA Nos. 7458, 7633, 88-3 BCA ¶ 21,084,
at 106,452. That burden is usually met by showing: (1)
a definite and unequivocal statement by the contractor
that he/she refused to perform; or (2) actions which
constitute actual abandonment of performance. See, Holt
Roofing Company, Inc., supra, 91-1 BCA ¶ 23,361 (a
contractor unequivocally repudiated a construction
contract when its principal arrived on the jobsite,
ordered the subcontractor to stop work, and stated he
hoped that the Government would terminate the contract
so that he could resume a normal life). See also,
Professional Building Services and Maintenance, ASBCA
No. 42480, 91-3 BCA ¶ 24,360. The contractor, on the
other hand, has the burden of proving that its
abandonment was excusable within the meaning of the
"Default" clause or was caused by the Government's
material breach of the contract. F & D Construction
Company, Inc. and D&D Management, Consulting and
Construction Company, Inc., ASBCA Nos. 41441-44, 91-2
BCA ¶ 23,983). . . .
* * * * * * * * * *
Finally, an anticipatory repudiation also occurs when a
contractor fails to proceed as directed pending
resolution of its dispute with the Government. Twigg
Corporation, supra, 93-1 BCA ¶ 25,318, at 126,157. See
also, A. N. Xepapas, AIA, supra, 91-2 BCA ¶ 23,799, at
119,179. . . . This Board, as well as the ad hoc appeals
panels which preceded it, have held on numerous
occasions that under the GPO "Disputes" clause, a
contractor is obligated to follow the contracting
officer's directives regardless of the merits of the
controversy. See, e.g., International Lithographing,
GPO BCA 1-88 (December 29, 1989); Colorgraphics
Corporation, GPO BCA 16-87 (March 31, 1989); Custom
Printing Company, GPO BCA 10-87 (May 10, 1988). See
also, e.g., Knepper Press, GPOCAB Nos. 2-84 and 3-84
(October 2, 1984); Business Forms Service, Inc., GPOCAB
9-81 (October 20, 1981); Merchant Service Company, GPO
Contract Nos. 373 and 374 [No GPOCAB Docket Number]
(February 11, 1980).36
Sterling Printing, Inc., supra, Sl. op. at 37-40, 44-45.
Assuming that the Contracting Officer's directions to reprint
the rejected flight strips were timely, in order to prevail on
its Cross Motion the Respondent, as the moving party, would
have to prove both elements of its "continued performance"
claim. FED.R. CIV.P. 56(c). That is, the Government would
have to show that: (1) the Contracting Officer gave a clear
instructions to the Appellant to that effect; and (2) the
Contractor refused to reprint the forms, as directed.
Sterling Printing, Inc., supra, Sl. op. at 37. However, the
mere fact that the Appellant failed to reprint the flight
strips will not suffice, i.e., there must be a "positive,
definite, unconditional, and unequivocal manifestation of
intent . . . on the part of the contractor . . . not to
render the promised performance." Id., Sl. op. at 39; United
States v. DeKonty Corporation, supra, 922 F.2d at 828; Cascade
Pacific International v. United States, supra, 773 F.2d at
293.
The key to the Respondent's case is the Contracting Officer's
letter of August 13, 1991, which gave the Appellant clear
instructions to "reprint the remaining rejected 221,760,000
flight strips" (R4 File, Tab M, p. 2). Cross Motion, p. 4.
Furthermore, it is undisputed that the Contractor did not
reprint the forms, as directed by the Contracting Officer, but
instead questioned the findings that the flight strips were
defective, participated in several meetings and discussions
with GPO and the FAA, and exchanged proposals in an effort to
resolve the problem. However, under the law, and contrary to
the Respondent's belief, see, Cross Motion, p. 8, the fact
that the Appellant did not replace the rejected flight strips
does not, in and of itself, furnish the necessary proof for
the second element of the "continued performance" doctrine.
What is missing from the Government's case is the "positive,
definite, unconditional, and unequivocal manifestation of
intent . . . on the part of the contractor . . . not to
render the promised performance." Compare, Sterling Printing,
Inc., supra, Sl. op. at 39, 42-45 (evidence of a positive,
unconditional, and unequivocal manifestation of intent to
abandon the contract), with Shepard (1993), supra, Sl. op. at
9, fn. 12 (no evidence of a positive, unconditional, and
unequivocal manifestation of intent to abandon the contract).
The Appellant, on the other hand, has done all that is
required of it under the Federal Rules to oppose the Cross
Motion. Specifically, it has pointed to an evidentiary
conflict created on the record both by presenting its own
counter statement of facts and arguments, set forth in detail,
and by supporting them with an affidavit from its attorney and
primary representative, a knowledgeable affiant. See, RBP
Chemical Corporation, supra, Sl. op. at 28 (citing, Barmag
Barmer Maschinenfabrik AG v. Murata Machinery, Ltd., supra,
731 F.2d at 836). See also, W.B. Huckabay Associates, Western
Offshore Group, Inc., supra, 93-2 BCA ¶ 25,676; Erie Tool
Works, supra, 89-1 BCA ¶ 21,316. With particular regard to
the Respondent's contention that Contractor failed to comply
with the Contracting Officer's direction to reprint the
defective flight strips, the Appellant expressly denies it.
App. Opp., Horne Affidavit, ¶ 2. Furthermore, the Contractor
tells us that throughout this period, up to and past the day
of default, the parties continued their discussions about a
possible equitable resolution of the dispute, and in fact, the
Contracting Officer himself kept changing the reprint
deadlines. App. Opp., p. 11; Horne Affidavit, ¶¶ 2-4. As
indicated above, the burden of proving that the contractor
communicated an intent not to perform in a positive, definite,
unconditional and unequivocal manner, either through definite
and unequivocal statements by the contractor that he/she
refused to perform, or actions which constituted actual
abandonment of performance, is on the Government. See,
Sterling Printing, Inc., supra, Sl. op. at 39; James B. Beard,
D.O., supra, 93-3 BCA ¶ 25,976, at 129,171; Holt Roofing
Company, Inc., supra, 91-1 BCA ¶ 23,361. When the Board
considers the Appellant's evidence, especially the statement
from its principal representative denying that the Contractor
refused to comply with any directions received from the
Contracting Officer, it must conclude that the Respondent has
failed to carry its burden of proof. See, RBP Chemical
Corporation, supra, Sl. op. at 27. Accordingly, the Cross
Motion is DENIED.
V. CONCLUSION
On the Motion and the Cross Motion, the Appellant and the
Respondent, respectively, had to show that as to matters
within their own burden of proof there were no genuine issues
of fact. Baca v. United States, supra, 29 Fed.Cl. at 358-59;
Bataco Industries, Inc. v. United States, supra, 29 Fed.Cl. at
322. However, it is clear to the Board that numerous facts
material to the resolution of the issues in this case remain
in dispute.37 As the record currently stands, the Board would
be required to review the conflicting assertions and evidence
presented by both parties and make factual determinations
based on that review in order to decide whether either party
is entitled to judgment as a matter of law.38 It is
inappropriate to make such factual determinations in a summary
judgment proceeding. See, RBP Chemical Corporation, supra,
Sl. op. at 30 (citing, Oak Cliff Realty, Inc., VABCA No. 3232,
91-1 BCA ¶ 23,481). See also, Anderson v. Liberty Lobby,
Inc., supra, 477 U.S. at 249, 255; Bataco Industries, Inc. v.
United States, supra, 29 Fed.Cl. at 322; Bromion, Inc., ASBCA
No. 37124, 89-1 BCA ¶ 21,424. Accordingly, it is the opinion
of the Board that neither party has carried its burden in this
proceeding of showing that there are no genuine issues of
material fact in dispute.
VI. ORDER
For all the foregoing reasons, the Appellant's Motion and the
Respondent's Cross Motion are DENIED. Accordingly, the Board
will schedule an evidentiary hearing in this appeal. Board
Rules, Rules 17 through 25. However, during the telephone
status conference on Tuesday, May 17, 1994, the parties, when
informed of this DECISION ON MOTIONS AND ORDER by the Board,
indicated that additional discovery is required. Board Rules,
Rules 14 and 15. Therefore, in accordance with the
arrangements agreed to by the parties and the Board at that
meeting, the parties are directed to develop a mutually
acceptable discovery plan and present it to the Board for its
approval no later than Thursday, June 30, 1994. While the
parties have until that date to develop and present their plan
to the Board, they are encouraged to do so sooner, if at all
possible. Board Rules, Preface to Rules, ¶ III.A. Upon
notification that discovery is complete, the Board will
consult with the parties by telephone, and arrange the date,
time and place for a hearing in this case. Board Rules, Rule
17.
It is so Ordered.
May 17, 1994 STUART M. FOSS
Administrative Judge
_______________
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on April 23, 1992. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice
and Procedure, dated September 17, 1984, Rule 4 (Board
Rules). The file consists of 23 documents, labeled Tabs A
through W, inclusive. The file will be referred to hereafter
as R4 File, with an appropriate Tab letter also indicated.
2 The Board's Report of a Telephone Status Conference, dated
February 14, 1994, incorrectly shows the date of the second
telephone status conference as February 8, 1993. Report of
Telephone Status Conference, dated February 14, 1994, p. 1
(RTSC-2). The year indicated is an obvious typographical
error.
3 The filing schedule established during the second telephone
status conference required the Appellant's and Respondent's
motions to be submitted on February 18, 1994, and March 10,
1994, respectively. RTSC-2, p. 4. However, the Appellant
subsequently asked for an extension of time of one week to
file its motion, which was granted without objection, and the
Board made the appropriate adjustments in the schedule
accordingly. Order Granting an Extension of Time to File
Motion for Summary Judgment, dated February 18, 1994, p. 2.
See, Board Rules, Preface to Rules, ¶ III.C.
4 The original filing schedule required the Respondent's
opposition and the Appellant's opposition to be filed on
February 28, 1994, and March 21, 1994, respectively. RTSC-2,
p. 4. When the Board granted the Appellant's request for an
extension of time to file a motion for summary judgment, it
also made the appropriate changes in the dates for the
parties to submit their oppositions; i.e., March 7, 1994 and
March 28, 1994, respectively. See, note 3 supra. Order
Granting an Extension of Time to File Motion for Summary
Judgment, dated February 18, 1994, p. 2. The Respondent
filed its opposition in accordance with the revised schedule
on March 7, 1994. The Appellant did not file its opposition
on March 28, 1994, as scheduled. However, on April 7, 1994,
the Appellant requested additional time from March 28, 1994,
to April 12, 1994, to submit its opposition to the
Respondent's cross motion for summary judgment, which was
granted in the absence of an objection. See, Order Extending
Time for Appellant to File a Response to Respondent's Motion
for Summary Judgment, dated April 18, 1994, pp. 2, 3. See,
Board Rules, Preface to Rules, ¶ III.C.
5 The factual description of this case is based on the R4
File, the Board's Report of A Prehearing Telephone
Conference, dated July 7, 1993 (RPTC), the Respondent's
Responses to Appellant's First Request for Admissions, dated
January 21, 1994 (Res. R.), and the Appellant's Answers and
Objections to Respondent's First Set of Interrogatories and
Request for Production of Documents, dated February 22, 1994
(App. A.). The facts surrounding this controversy are
recited here only to the extent necessary to dispose of the
Motion and Cross Motion.
6 These flight strips were marginally punched continuous
forms used by the FAA for air traffic control purposes (R4
File, Tab A, p. 1). Accordingly, they had to have consistent
dimensions, especially for depth and thickness, in order to
function properly when processed through the FAA's data
printers (R4 File, Tab A, p. 1).
7 GPO Contract Terms, Solicitation Provisions, Supplemental
Specifications, and Contract Clauses, GPO Publication 310.2,
Effective December 1, 1987 (Rev. 9-88) (GPO Contract Terms).
8 The reference in the IFB to the September 1, 1980, version
of GPO Contract Terms, is clearly a typographical error. At
the time of the solicitation and award of the disputed
contract, the revised September 1988 edition of GPO Contract
Terms was in effect. See, note 7 supra. Indeed, the IFB's
specifications later refer to "GPO Contract Terms, dated
September 1, 1988." See, R4 File, Tab A, p. 7 (Schedule).
As indicated in the specification, Article 14 of the 1988 GPO
Contract Terms is entitled "Inspection and Tests". GPO
Contract Terms, Contract Clauses, Art. 14. On the other
hand, in the two prior versions of GPO Contract Terms-1979
and 1980-the "Inspection and Tests" provisions are found in
Articles 12 and 2-12, respectively. See, GPO Contract Terms
No. 1 (Revised), GPO Publication 310.2, August 1, 1979,
General Provisions, Art. 12; GPO Contract Terms No. 1, GPO
Publication 310.2, Revised October 1, 1980, General
Provisions, Art. 2-12.
9 The Contractor states that it did not knowingly supply
prior-to-production samples or the final product which did
not conform to the specifications. App. A., ¶¶ 17, 18. In
this regard, it should be remembered that an essential
element of the so-called "substantial compliance" rule is
that the contractor must reasonably believe, in good faith,
that the delivered supplies conformed to the contract when
shipped and that they would be acceptable. See, McDonald &
Eudy Printers, Inc., GPO BCA 06-91 (May 6, 1994), Sl. op. at
18, fn. 16 (citing, Radiation Technology, Inc. v. United
States, 177 Ct.Cl. 227, 232, 366 F.2d 1003, 1006 (1966));
Sterling Printing, Inc., GPO BCA 20-89 (March 28, 1994), Sl.
op. at 35, fn. 48; Hurt's Printing Company, Inc., GPO BCA
27-92 (January 21, 1994), Sl. op. at 17; Shepard Printing,
GPO BCA 23-92 (April 29, 1993), Sl. op. at 19-20 (hereinafter
Shepard (1993)). The Appellant also says that before running
the prior-to-production samples the Appellant noticed that
the contract specifications had a reduced tolerance for
registration of printed lines compared to flight strips
produced under previous contracts, so it conducted frequent
quality control checks during production of all samples and
the final product. App. A., ¶¶ 16(a),(b). Furthermore, the
Appellant used the same methods and equipment to produce all
flight strip quality control samples. App. A., ¶ 16(c).
10 There were 8 exhibits attached to the Respondent's
Responses to Appellant's First Requests for Admissions. They
are cited in this opinion as "App. Exh. No.", with an
appropriate number thereafter.
11 As specified in the "Quality Assurance" provisions of the
contract, the FAA was the authorized to conduct the
acceptance inspections of the flight strips at the delivery
destination. See, R4 File, Tab A, p. 5. Both GPO and the
FAA contend the acceptance inspections were conducted in
accordance with MIL-STD-105D. See, RPTC, p. 3, fn. 2.
12 During these discussions, the Respondent stated that its
"initial inspection" confirmed FAA's complaint of
misalignment between the left and right pinfeed holes, and a
problem with the 1/4" spacing between the bottom rule and the
perforation (R4 File, Tab H). RPTC, p. 3.
13 In the context of discovery, the Respondent made several
admissions concerning its attempts to reprocure approximately
200,000,000 flight strips from Elgin Business Forms, Inc.
(Elgin), under Jacket No. 663-505. Res. R., ¶¶ 48-56. Those
admissions are not relevant to these summary proceedings.
However, according to the Respondent, Elgin was also unable
to produce conforming flight strips. Res. R., ¶¶ 54-56.
When that fact is considered in light of the Respondent's
admission that several changes were made to the contract
specifications, including the "specification drawing", in its
successful repurchase of the Elgin contract under Jacket No.
662-267, Res. R., ¶¶ 71-72, the Board wonders if there may be
an issue in this appeal concerning whether or not the flight
strip specifications in the Appellant's contract may have
been defective. Cf., Printing Unlimited, GPO BCA 21-90
(November 30, 1993), Sl. Op. at 17-18, 21-22; Graphics Image,
Inc., GPO BCA 13-92 (August 31, 1992), Sl. op. at 20-21.
14 The Board was created by the Public Printer in 1984. GPO
Instruction 110.10C, Subject: Establishment of the Board of
Contract Appeals, dated September 17, 1984 (hereinafter GPO
Instruction 110.10C). Prior to that time, appeals from
decisions of GPO Contracting Officers were considered by ad
hoc panels of its predecessor, the GPO Contract Appeals Board
(GPOCAB). The Board has consistently taken the position that
it is a different entity from the GPOCAB. See, e.g.,
McDonald & Eudy Printers, Inc., supra, Sl. op. at 15, fn. 11;
Sterling Printing, Inc., supra, Sl. op. 29, fn. 40; Shepard
Printing, GPO BCA 37-92 (January 28, 1994), Sl. op. at 11,
fn. 10; The Wessel Company, Inc., GPO BCA 8-90 (February 28,
1992), Sl. op. at 25, fn. 25. Nonetheless, it has also been
the Board's policy to follow the holdings of the ad hoc
panels where applicable and appropriate, but the Board
differentiates between its decisions and the opinions of
those panels by citing the latter as GPOCAB. See, e.g.,
Stephenson, Inc., GPO BCA 02-88 (December 20, 1991), Sl. op.
at 18, fn. 20; Chavis and Chavis Printing, GPO BCA 20-90
(February 6, 1991), Sl. op. at 9, fn. 9.
15 As indicated by the Respondent, the warranty period
expired on April 20, 1991. See, Res. Opp., p. 5, fn. 3.
16 The Appellant also states that the Contracting Officer's
letter of April 11, 1991, did not "assert that GPO believed
the [f]light [s]trips were defective, . . .". Motion, p. 7.
In that regard, the Board has observed, on numerous
occasions, that the Respondent's Printing Procurement
Regulation, expressly states that the only person authorized
to make final determinations on whether products shipped by a
contractor conform to contract specifications is the
Contracting Officer. See, Printing Procurement Regulation,
GPO Publication 305.3 (September 1, 1988), Chap. XIII, Sec.
1, ¶ 4.f. (PPR). See also, e.g., McDonald & Eudy Printers,
Inc., supra, Sl. op. at 22, fn. 17; Sterling Printing, Inc.,
supra, Sl. op. at 34-35, fn. 46; Hurt's Printing Company,
Inc., supra, Sl. op. at 10, fn. 13. Indeed, the general view
is that the Contracting Officer's discretion to decide
whether a product is conforming or nonconforming is inherent
in his/her administration of the contract. Sterling
Printing, Inc., supra, Sl. op. at 34-35, fn. 46 (citing,
Vogard Printing Corporation, GPOCAB 7-84 (January 7, 1986),
Sl. op. at 6; Thomas W. Yoder Company, Inc., VACAB No. 997,
74-1 BCA ¶ 10,424).
17 The Appellant's proposed remedy is to convert GPO's
default termination of the contract into a termination for
convenience. Motion, p. 8. The Contractor misconceives the
nature of the remedy in this case if the Board was to find
that the default termination was unjustified. The general
rule that the Government's failure to sustain its default
action results in treating the parties as if a termination
for convenience had taken place, is expressly stated in the
"Default" clause of the contract. See, GPO Contract Terms,
Contract Clauses, Art. 20(g). However, by its terms the
"Default" clause, and hence the rule, deals with contracts
where all or some measure of performance is still expected
from the contractor. See, e.g., Graphics Image, Inc., supra,
Sl. op. at 28; Pennsylvania Printed Products Company, Inc.,
GPO BCA 29-87 (January 22, 1990), Sl. op. at 14, mot. for
reconsid. denied, GPO BCA 29-87 (June 7, 1990); American
Drafting & Laminating Company, GPO BCA 6-85 (April 15, 1986),
Sl. op. at 17; General Business Forms, Inc., GPO BCA 2-84
(December 3, 1985), Sl. op. at 23. Accord, Brandywine
Prosthetic-Orthotic Services, Ltd., VABCA No. 3441, 93-1 BCA
¶ 25,250. Indeed, in Industrionics, Inc., a case cited by
the Appellant, the ad hoc panel noted that: "The right to
terminate for default is limited to the executory or
unfinished portion of a contract. Acceptance of supplies
bars a default termination on that work that was accepted."
Industrionics, Inc., supra, Sl. op. at 6 (citing, K Square
Corporation, IBCA No. 959-3-72, 73-2 BCA ¶ 10,363; Astubeco,
Inc., ASBCA No. 8727, 1963 BCA ¶ 3,941). In this case, a
finding that the Appellant's flight strips had been accepted
by the Government would mean that the entire contract was
fully performed and paid for. Thus, overruling the
Contracting Officer would simply nullify his act, and leave
the parties in the exactly the same position they were before
the dispute arose. Cf., Folk Construction Company, Inc., ENG
BCA Nos. 5839, 5899, 93-3 BCA ¶ 26,094, at 129,732 ("When the
Government improperly or ineffectively terminates an ongoing
contract for default, usually the appropriate remedy is to
convert this action into a termination for the convenience of
the Government. However, in this case, the Government
attempted to terminate the right to proceed for default where
the work had already ended by mutual agreement, . . . . As
such, the implications and rights attendant to a termination
for default valid or invalid do not attach here, because the
Government no longer possessed the power to terminate
Appellant's right to proceed; that power lapsed when the
parties agreed that the contract was complete. Since the
termination action is in itself a nullity, the traditional
remedy of conversion does not lie." [Original emphasis.]).
Also cf., Lionsgate Corporation, ENG BCA No. 5809. 92-2 BCA ¶
24,983; Gilbert W. Savage, A.I.A., ASBCA No. 11090, 66-2 BCA
¶ 5,832.
18 The Respondent recognizes that one of the Appellant's
principal arguments is that GPO's payment for the flight
strips is evidence that they were accepted. Res. Opp., p. 4,
fn. 2. The Respondent believes that even if that was the
general rule (citing, FAR 52-232-1), the "unique nature" of
GPO contracts makes the principle inapplicable here because
GPO contractor's are paid prior to inspection, simply on
proof of delivery (citing, GPO Contract Terms, Contract
Clauses, Art. 24). See, Res. Opp., Attachment, Declaration
of Richard W. Wildbrett, ¶ 11 (Wildbrett Declaration).
Consequently, payment and acceptance do not necessarily go
"hand-in-hand" where GPO contracts are concerned. Res. Opp.,
p. 4, fn. 2. In any event, the Respondent contends that the
presence of the "Warranty" clause makes it unnecessary to
reach the question of whether the flight strips were
accepted, especially since the clause allows an agency to
revoke any previous acceptance. Id. (citing, Air, Inc.,
GSBCA No. 8847, 91-1 BCA ¶ 23,352, at 117,111; Goal Chemical
Sealants Corporation, GSBCA Nos. 8627, 8628, 88-3 BCA ¶
21,083, at 106,447).
19 As the Respondent notes, one purpose of warranty clauses
is to exempt the Government from the necessity of exercising
extreme diligence in its inspections. Res. Opp., p. 4
(citing, Market Equipment Ltd., ASBCA No. 9639, 65-1 BCA ¶
4,608).
20 The Respondent has referred the Board to several cases
from other forums which stand for the proposition that oral
notice to the contractor within the warranty period is
sufficient to invoke the remedies available to the Government
where a breach has occurred. Res. Opp., pp. 6-7 (citing,
U.S. f.u.o. Contraction Products Corporation v. Bruce
Construction Corporation, 272 F.2d 62 (5th Cir. 1959);
Harwell Construction Company, ENG BCA No. PCC-30, 79-2 BCA ¶
14,061). However, the GPO "Warranty" clause clearly requires
a written notice to the contractor. GPO Contract Terms,
Contract Clauses, Art. 15(b)(1). The Board has stated on
numerous occasions that it is not a creature of statute, but
rather its authority is purely derivative and contractual,
and thus it is limited to deciding disputes within the
parameters of the contract under review. See, e.g., McDonald
& Eudy Printers, Inc., GPOBCA 40-92 (January 31, 1994), Sl.
Op. at 7-8, fn. 10; Shepard (1993), supra, Sl. op. at 25, fn.
29; The Wessel Company, Inc., supra, Sl. op. at 32-33; Bay
Printing, Inc., GPO BCA 16-85 (January 30, 1987), Sl. op. at
9; Peake Printers, Inc., GPO BCA 12-85 (November 12, 1986),
Sl. op. at 6. Since, the language in GPO's "Warranty" clause
is unmistakable and unambiguous, an oral notification to the
contractor is insufficient to trigger the Government's rights
under its provisions. Therefore, the cases cited by the
Respondent are irrelevant to this appeal.
21 The Board observes that the Respondent begins its Cross
Motion argument under the heading "Appellant is Entitled to
Judgment as a Matter of Law." Cross Motion, p. 3. Clearly,
the reference to "Appellant" instead of "Respondent" is an
inattentive or inadvertent error, and not a concession on
GPO's part.
22 The fact that the Respondent is pursuing a summary ruling
in its favor on a ground other than the one given by the
Contracting Officer when he defaulted the contract, does not
make the Cross Motion invalid. As the Board has observed, a
contracting officer's termination decision may be sustained
on other than the stated grounds as long as the alternate
grounds existed at the time of termination. See, e.g,
Sterling Printing, Inc., supra, Sl. op. at 37-38, fn. 50
(citing, Joseph Morton Company, Inc. v. United States, [32
CCF ¶ 73,277], 757 F.2d 1273, 1277 (Fed. Cir. 1985); James B.
Beard, D.O., ASBCA Nos. 42677, 42678, 93-3 BCA ¶ 25,976, at
129,171).
23 The Board has no doubt that the parties exchanged
proposals in an effort to settle their dispute prior to
December 24, 1991. App. A., ¶ 21; Res. R., ¶¶ 39, 41-43.
However, it simply notes that R4 File, Tabs Q and T, as well
as Tabs O, P, R, U and V, are all copies of post-default
correspondence toward that end. Indeed, the record discloses
that before its contract was defaulted the Appellant's
official position was: (a) the flight strips were not
defective; (b) any problem with running the forms was due to
the improper adjustment of the FAA printers; and (c) in any
event, the contract was fully performed and the Contractor
had no further obligations to the Government under it (R4
File, Tabs J and L).
24 Among other things, the Appellant repeats the same
arguments based on the same facts, and relies on the same
cases, it used to support in its own Motion for summary
judgment. App. Opp., pp. 7-10. Those assertions need not be
set forth again. Furthermore, the Appellant contends that
those facts, particularly the Respondent's failure to
promptly inspect and accept or reject the flight strips, or
notify the Contractor of the FAA's complaints, warrant the
conclusion that GPO's right to terminate for default may well
have been lost by its prior material breach of the contract.
App. Opp., p. 10 (citing, Malone v. United States, 849 F.2d
1441, 1445-46 (Fed. Cir. 1988); Brand S Roofing, ASBCA No.
24688, 82-1 BCA ¶ 15,513, at 76,958; GPO Contract Terms,
Contract Clauses, Arts. 14(c),(j)). Moreover, the Appellant
contends, for the first time, that the Contracting Officer's
termination for default might be procedurally defective,
because "none of GPO's submissions indicates that the pre-
default procedures required by GPO's printing procurement
regulations . . . were followed in this case; nor has GPO
included in the Rule 4 File a copy of the Contracting
Officer's memorandum to GPO's Contract Review Board seeking
approval to terminate the contract for default." See, App.
Opp., pp. 6, 11 (citing, Brill Brothers, Inc., ASBCA No.
42573, 93-2 BCA ¶ 25,795; PPR, Chap. XIV, Sec. 1, ¶ 3). In
that regard, GPO's printing procurement regulation provides
that the Contracting Officer must submit a proposal to
terminate a contract for default to the Contract Review Board
(CRB) for its review and concurrence. See, Hurt's Printing
Company, Inc., supra, Sl. op. at 7, fn. 10 (citing, PPR,
Chap. I, Sec. 10, ¶ 4.b(i)). See also, Graphics Image, Inc.,
supra, Sl. op. at 9, fn. 10. On the other hand, the
regulation also allows the Contracting Officer to take an
action contrary to the position of the CRB, provided that the
CRB's Chairperson is promptly notified and the reasons for
the contrary action are reduced to writing and made part of
the permanent file. Id. (citing, PPR, Chap. I, Sec. 10, ¶
3.b.). As a rule, Government acts are presumed to be regular
and authorized. See, United States v. Roses, Inc., 706 F.2d
1563, 1567 (Fed. Cir. 1983). The fact that the Contracting
Officer's CRB memorandum is not in the appeal file is not
proof that it does not exist, or that the Contracting Officer
failed to carry out his responsibilities under the GPO's
regulations before defaulting the Appellant. In any event,
none of these matters can be resolved in the context of this
summary proceeding, but will have to await the evidentiary
hearing which the Board intends to order in this case.
Accord, Brill Brothers, Inc., supra, 93-2 BCA ¶ 25,795, at
128,358; Stanley Machining & Tool Company, Inc., ASBCA No.
44177, 92-3 BCA ¶ 25,195, at 125,545-46. For the purposes of
this decision, the Board has confined its description of the
Appellant's opposition to the Cross Motion to the ground
actually asserted by the Respondent-that the Contractor
failed to comply with the Contracting Officer's direction to
replace the defective flight strips.
25 The Board Rules specifically identify only two types of
motions; i.e., motions for dismissal for lack of jurisdiction
and motions for reconsideration. See, Board Rules, Rules 5,
12.4 (reconsideration in small claims (expedited) and
accelerated procedure cases) and 29 (reconsideration in cases
conducted under the regular procedure).
26 Default terminations-as a species of forfeiture-are
strictly construed. See, D. Joseph DeVito v. United States,
188 Ct. Cl. 979, 413 F.2d 1147, 1153 (1969). See also,
Murphy, et al. v. United States, 164 Ct. Cl. 332 (1964); J.
D. Hedin Construction Co. v. United States, 187 Ct. Cl. 45,
408 F.2d 424 (1969). Indeed, in the words of one contract
appeals board, in exercising its right to terminate for
default, the Government must "turn square corners in order to
prevail." Delfour, Inc., supra, 89-1 BCA ¶ 21,394, at
107,855 (citing, K & M Construction, ENG BCA Nos. 2998, et
al., 73-2 BCA ¶ 10,034). The board was quick to add,
however, that this did not mean " . . . that the Government
[needed to] display clairvoyance [or] the patience of Job in
the management of its contracts." Id. On the other hand,
because a default termination is a discretionary act, it must
be reasonably exercised. Darwin Construction Company, Inc.
v. United States, 811 F.2d 593 (Fed. Cir. 1987).
27 One of the principal purposes of summary judgment is to
isolate and dispose of factually unsupported claims or
defenses. Celotex Corporation v. Catrett, 477 U.S. 317,
323-24 (1986). As a consequence, the procedure is deemed "an
integral part of the Federal Rules as a whole, which are
designed `to secure the just, speedy and inexpensive
determination of every action.'" Id., at 327 (citing, FED.
R. CIV. P. 1; Schwarzer, Summary Judgment under the Federal
Rules: Defining Genuine Issues of Material Fact, 99 F.R.D.
465, 467 (1987)). See also, Board Rules, Preface to Rules, ¶
VI.C. Indeed, district courts have the power to enter such
judgments sua sponte, provided that the losing party has
notice that it must come forward with all of its evidence.
Celotex Corporation v. Catrett, supra, 477 U.S. at 326
(citing, 10A C. Wright, A. Miller & M. Kane, Federal Practice
and Procedure, § 2720, pp. 28-29 (1983)). While courts are
reluctant to deprive a litigant of the right to a jury trial,
nonetheless they recognize that the summary procedure,
"properly employed," is a useful device for unmasking
frivolous claims and putting a swift end to meritless
litigation. IBM Poughkeepsie Employees Federal Credit Union
v. Cumis Insurance Society, Inc., supra, 590 F.Supp. at 771
(citing, Quinn v. Syracuse Model Neighborhood Corporation, 63
F.2d 438, 445 (2d Cir. 1980); Applegate v. Top Associates,
Inc., 425 F.2d 92, 96 (2d Cir. 1970)). However, courts
always have discretion to deny the motion even where the
moving party seems to have discharged its summary judgment
burden. See, e.g., Flores v. Kelley, 61 F.R.D. 442 (D.Ind.
1973); John Blair & Co. v. Walton, 47 F.R.D. 196, 197 (D.Del.
1969). In such cases, the thinking is that regardless of
whether the burden is met, the court should have the freedom
to allow the case to continue when it has any doubt as to the
wisdom of terminating the action prior to a full trial. See,
e.g., Baca v. United States, 29 Fed.Cl. 354, 358 (1993)("A
trial court may deny summary judgment, if `there is reason to
believe that the better course would be to proceed to
trial.'" [Citation omitted.]) See also, Olberding v.
Department of Defense, et al., 564 F.Supp. 907, 908, fn. 1
(D.Ia. 1982), affirmed 709 F.2d 621 (8th Cir. 1983).
Furthermore, where difficult legal issues are involved, the
court can refuse summary judgment on the ground that a fuller
development of the facts may serve to clarify the law or help
indicate its application to the case. See, e.g., Davidson v.
Stanadyne, Inc., 718 F.2d 1334, 1339, (5th Cir. 1983);
Security Pacific National Bank v. OL.s. Pacific Pride, O/N,
549 F.Supp. 53, 55 ((D.Wash. 1982). Most boards of contract
appeals approach summary judgment in default termination
cases with a liberal view of what constitutes a genuine issue
of material fact, and will apply an extra measure of caution
before granting the motion. See, e.g., 330 Main Street
Associates Limited Partnership (contract interpretation
issue), GSBCA No. 9477, 91-2 BCA ¶ 23,981; Lou Faro Leasing,
Inc., PSBCA No. 2889, 91-2 BCA ¶ 23,668 (unresolved safety
issue); Dowty Batteries (Loudwater), ASBCA No. 39811, 91-1
BCA ¶ 23,396 (unresolved excusability issue); Foremost
Threaded Products, GSBCA No. 10091, 90-3 BCA ¶ 22,980
(unresolved contracting authority issue); Sonora
Manufacturing, Inc., ASBCA Nos. 31589, 31591, 89-1 BCA ¶
21,553 (unresolved excusability and contract formation
issues). See also, Castillo Printing Company, supra, Sl. op.
at 39-41 (contract interpretation issue).
28 Generally, a fact is material if it tends to resolve any
of the issues that have been properly raised by the parties.
See, e.g., Contemporary Mission, Inc. v. New York Times Co.,
665 F.Supp. 24, 257 (D.S.D.N.Y. 1987), affirmed 842 F.2d 612
(2nd Cir. 1988), cert. denied 109 S. Ct. 145 (1989); Hahn v.
Sargent, 523 F.2d 461 (1st Cir. 1975), cert. denied 425 U.S.
904 (1976). See also, Tracor Resources, Inc., ASBCA No.
44759, 93-2 BCA ¶ 25,616, at 127,515. Consequently, in
ruling on motions for summary judgment Federal courts have
held that a fact or facts are material if they constitute a
legal defense, or if their existence or nonexistence might
affect the result of the action, or if the resolution of the
issue they raise is so essential that the party against whom
it is decided cannot prevail, or if they would permit a
reasonable finder of fact to return a verdict in favor of the
nonmovant. See, e.g., Weiss v. Marsh, 543 F.Supp. 1115, 1116
(D.Ala. 1981) (legal defense); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986) (affect result of action);
Alvarado Morales v. Digital Equipment Corporation, 669
F.Supp. 1173, 1178 (D.P.R. 1987) (cannot prevail); Bataco
Industries, Inc. v. United States, 29 Fed.Cl. 318, 322 (1993)
(verdict in favor of nonmovant). Similarly, courts have used
a variety of shorthand expressions to indicate whether a
genuine factual issue exists. Thus, summary judgment is not
warranted as long as the "slightest doubt" remains as to the
facts, or alternatively, that summary judgment should be
granted only when the movant is entitled to it "beyond all
doubt." See, e.g., Schwatrzbord v. United States, 575 F.Supp.
1560, 1561 (D.S.D.N.Y. 1983); Anderson v. Liberty Lobby,
Inc., supra (slightest doubt); Evans v. McDonnell Aircraft
Corporation, 395 F.2d 359 (8th Cir. 1968); United States v.
White, 40 F.R.D. 27 (D.Ark. 1964) (beyond a "reasonable"
doubt). The thrust of all these formulations is the same-a
movant is not entitled to summary judgment merely because its
facts appear more plausible than those tendered in
opposition, or because it appears that the adversary is
unlikely to prevail at trial. See, e.g., H. E. Reeves, Inc.
v. Laredo Ready Mix, Inc., 589 F.Supp. 132 (D.Tex. 1984);
Harl v. Acacia Mutual Life Insurance, 317 F.2d 577 (D.C.Cir.
1963). If the evidence presented on the motion is subject to
conflicting interpretations or reasonable persons might
differ as to its significance, summary judgment is improper.
See, e.g., Sears, Roebuck & Co. v. General Services
Administration, 553 F.2d 1378 (D.C. Cir. 1977), cert. denied
434 U.S. 826 (1978); United States v. Conservation Chemical
Company, 619 F.Supp. 162 (D.Mo. 1985); United States v.
General Motors Corporation, 65 F.R.D. 115 (D.D.C. 1974).
29 In Celotex Corporation v. Catrett, the United States
Supreme Court stated: "[T]he plain language of Rule 56(c)
mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial. In such a
situation, there can be `no genuine issue as to any material
fact,' since a complete failure of proof concerning an
essential element of the nonmoving party's case necessarily
renders all other immaterial." Celotex Corporation v.
Catrett, supra, 477 U.S. at 322-23. [Emphasis added.] The
Supreme Court also added that the burden on the party moving
for summary judgment is an affirmative one and is not met
merely by disproving the unsupported claims of its opponent.
Id., at 323. Although the Supreme Court's opinion requires
summary judgment if the nonmoving party cannot show that it
will be able to establish an essential element of its case,
as previously mentioned, the Board's research indicates that
agency contract appeals boards are somewhat less inclined to
grant such a motion on the same set of facts than are the
courts. See, note 27 supra. The Board suspects that the
reason for this apparent leniency on the part of the boards
has something to do with the nature of the administrative
process itself. In that regard, the Supreme Court instructs
that: "Rule 56 must be construed with due regard not only for
the rights of persons asserting claims and defenses that are
adequately based in fact to have those claims and defenses
tried to a jury, but also for the rights of persons opposing
such claims and defenses to demonstrate in the manner
provided by the Rule, prior to trial, that the claims and
defenses have no factual basis." Celotex Corporation v.
Catrett, supra 477 U.S. at 327. [Emphasis added.]
Administrative proceedings, of course, are not intended to
confront the parties with all the rigors of courtroom
litigation before a jury. Furthermore, it is axiomatic that
in administrative hearings the strict rules of evidence do
not apply. Federal Trade Commission v. Cement Institute, 333
U.S. 683, 705-06 (1948). See also, Donovan v. Sarasota
Concrete Company, 693 F.2d 1061, 1066 (11th Cir. 1982);
Calhoun v. Bailar, 626 F.2d 145, 148 (9th Cir. 1980). The
twin tests for the admission of evidence submitted in an
administrative proceeding are relevancy and materiality, and
not strictly whether the proof is admissible in a court
proceeding. Grant Associates, Inc. v. United States, 11
Cl.Ct. 816 (1987). Thus, an administrative body may exclude
evidence otherwise admissible under the Federal rules. See,
Carpenter Sprinkler Corporation v. National Labor Relations
Board, 605 F.2d 60,66 (2d Cir. 1979). Perhaps the best known
difference between the courts and administrative bodies is
the use of hearsay evidence, which is fully admissible in
administrative proceedings. See, Evosevich v. Consolidation
Coal, 789 F.2d 1021 (3rd Cir. 1986); Williams v. Department
of Transportation, 781 F.2d 1573 (11th Cir. 1986), rehearing
denied, 794 F.2d 687 (1987). In that regard, hearsay proof
is allowed if it is relevant and material, see, Veg-Mix, Inc.
v. Department of Agriculture, 832 F.2d 601 (D.C. Cir. 1987),
and otherwise reliable, adequate, probative and fundamentally
fair. See, e.g. Mobile Consortium of CETA Alabama v.
Department of Labor, 745 F.2d 1416 (11th Cir. 1984); Diaz v.
Postal Service, 658 F.Supp. 484 (E.D. Cal. 1987). See also,
Pitts on behalf of Pitts v. United States, 1 Cl.Ct. 148
(1983). Therefore, while Celotex Corporation v. Catrett, a
5-4 Supreme Court decision with no majority opinion, is
certainly instructive (although somewhat confusing, as
predicted by Justice Brennan in his dissent, see, 477 U.S. at
329), the Board is not persuaded that its rigid view of
summary judgment can, or should be applied in an
administrative context.
30 The Federal Rules provide: "[A]n adverse party may not
rest upon the mere allegations or denials of his pleadings,
but his response, by affidavits or as otherwise provided in
this rule, must set forth specific facts showing that there
is a genuine issue for trial. If he does not so respond,
summary judgment, if appropriate, shall be entered against
him." FED. R. CIV. P. 56(e). See, Celotex Corporation v.
Catrett, supra, 477 U.S. at 324; First National Bank of
Arizona v. Cities Service Co., 391 U.S. 253, 289 (1968);
Mingus Constructors, Inc. v. United States, 812 F.2d 1387,
1390-91 (Fed. Cir. 1987). See also, Do-Well Machine Shop,
Inc., ASBCA No. 34898, 89-1 BCA ¶ 21.491, at 108,281; Ite
Incorporated, supra, 88-1 BCA ¶ 20,269, at 102,595.
31 On October 22, 1992, certain provisions of the Federal
Courts Administration Act of 1992, Pub. L. No. 102-572, 106
Stat. 4506 (1992), became effective. Pursuant to Title IX,
the United States Claims Court was renamed the United States
Court of Federal Claims.
32 See, GPO Contract Terms, Contract Clauses, Art. 15(k). As
defined by the GSBCA, a latent defect is one "which cannot be
discovered by observation or inspection made with ordinary
made with ordinary care." ABM/Ansley Business Materials v.
General Services Administration, supra, 93-1 BCA ¶ 25,246, at
125,749 (citing, Santa Barbara Research Center, ASBCA 27831,
88-3 BCA ¶ 21,098, at 106,515). See also, General Electric
Company, ASBCA Nos. 36005, 38152, 91-3 BCA ¶ 24,353, at
121,689-91. In order to set aside acceptance on a latent
defect theory, ". . . the Government must prove, by a
preponderance of the evidence, that the defect existed, but
could not reasonably have been detected, at the time of final
acceptance." ABM/Ansley Business Materials v. General
Services Administration, supra, 93-1 BCA ¶ 25,246, at 125,749
(citing, Santa Barbara Research Center, supra, 88-3 BCA ¶
21,098, at 106,516; Makoor Products Manufacturing Company,
GSBCA No. 5779, 81-1 BCA ¶ 15,135, at 74,867). See also,
Ahern Painting Contractors, Inc., GSBCA Nos. 7912, 8368,
8697, 90-1 BCA ¶ 22,291, at 111,954 (citing, Kaminer
Construction Corporation v. United States [19 CCF ¶ 82,736],
203 Ct.Cl. 182, 488 F.2d 980 (1973)). The Government cannot
rely on the mere fact of a defect to prove its existence;
i.e., a "res ipsa loquitur" argument is no substitute for
hard proof and is not favored by contract appeals boards.
Cannon Structures, Inc., AGBCA No. 90-207-1, 93-3 BCA ¶
26,059, at 129,541; ABM/Ansley Business Materials v. General
Services Administration, supra, 93-1 BCA ¶ 25,246, at
125,749-50 (citing, Santa Barbara Research Center, supra,
88-3 BCA ¶ 21,098, at 106,516). Neither party has raised
the latent defect issue in this proceeding, so the Board does
not need to address it. However, the positions taken by the
parties during their exchange of settlement proposals-the
Respondent insisted that the flight strips were defective
while the Appellant was just as adamant that any problem with
running the forms was due to the improper adjustment of the
FAA printers, see, note 23 supra-indicates to the Board that
the latent defect issue is lurking in the bushes. See, RBP
Chemical Corporation, supra, Sl. op. at 27. See also,
Transit Products Company, Inc., ENG BCA Nos. 4796, 4804, 88-2
BCA ¶ 20,673, at 104,492.
33 Although neither party pressed the issue, both the
Appellant and the Respondent briefly addressed the question
of whether the Government had waived its right to reject the
flight strips and default the contract under the facts of
this case. See, Motion, p. 6; Res. Opp., pp. 7-8. The
answer to that question essentially depends on whether the
delay between the delivery of the flight strips in November
1990, the Contracting Officer's decision to reject
221,760,000 of them in June 17, 1991, seven months later, and
his default action on December 24, 1991, more than a year
after the Appellant was paid for the job, was an unreasonable
amount of time under the circumstances, thus causing the
Government to lose its right to terminate the contract. See,
D. Joseph DeVito v. United States, supra, 188 Ct. Cl. 979,
413 F.2d at 1154. See also, Professional Divers, ASBCA No.
37117, 89-3 BCA ¶ 22,251; Thiokol Corporation, ASBCA No.
32629, 89-3 BCA ¶ 22,063); The Florsheim Co., ASBCA No. 8023,
1964 BCA ¶ 4,425; Randam Electronics, Inc., ASBCA No. 9006,
1964 BCA ¶ 4,207; Cudahy Packing Co. v. United States, 109
Ct.Cl. 833, 75 F.Supp. 394 (1948). (The same question was
present in RBP Chemical, where a year elapsed between the
date the developer was delivered to GPO-January 2, 1990-and
the date the contract was terminated for default-January 3,
1991. See, RBP Chemical, supra, Sl. op. at 19, fn. 16.
However, the issue was never litigated because the parties
settled the case after the Board denied GPO's motion for
summary judgment.) What constitutes a reasonable time, and
hence a reasonable forbearance period under the law of
"waiver" or "Government estoppel" for the Contracting Officer
to investigate the facts and to determine what course of
action would be in the best interest of the Government as the
non-defaulting party, is a question of fact which must be
determined on a case by case basis. See, Snowbird
Industries, Inc., ASBCA No. 31368, 88-2 BCA ¶ 20,618, at
104,210 (citing, Cudahy Packing Co. v. United States, supra,
109 Ct.Cl. 833, 75 F.Supp. 394); Stephenson, Inc., supra, Sl.
op. at 21-22. Consequently, when the time taken by the
Government to act in its best interest raises the question of
whether it was reasonable or not, and the parties are in
dispute on that issue, summary judgment cannot be granted.
See, Danrenke Corporation, VABCA No. 3601, 93-1 BCA ¶ 25,365,
at 126,337; Snowbird Industries, Inc., supra, 88-2 BCA ¶
20,618, at 104,210.
34 The rationale for this dual application of the default
clause is simple. As explained by Cibinic and Nash: "While
these clauses explicitly make untimely performance the basis
for the default action, it is important to recognize that
nearly every Government contract spells out the contractor's
required performance in terms of the nature of the product or
service which is to be delivered or performed as well as the
time by which these performance efforts are to be completed.
Thus, in order for the contractor to render `timely
performance,' two basic requirements must be satisfied. The
product, service, or construction work must conform to the
required design/performance characteristics, and the product
must be delivered or the work completed by the specified due
date." [Emphasis added.] John Cibinic, Jr. & Ralph C. Nash,
Jr., Administration of Government Contracts 2d ed., (The
George Washington University, 1986), p. 677.
35 The doctrine has its roots in the standard "Disputes"
clause found in Government contracts. See, FAR §
52.233-1(h). The statutory underpinning for this contractual
provision is to be found in the Contract Disputes Act of
1978, 41 U.S.C. §§ 601 et seq., which provides: "Nothing in
this chapter shall prohibit executive agencies from including
a clause in government contracts requiring that pending final
decision of an appeal, action, or final settlement, a
contractor shall proceed diligently with performance of the
contract in accordance with the contracting officer's
decision." 41 U.S.C. § 605(b). The comparable contract
language in GPO contracts is in paragraph (d) of the
"Disputes" clause. See, GPO Contract Terms, Contract
Clauses, Art. 5 (d).
36 A contractor who performs as directed and appeals, and
then prevails on the merits, would be entitled to an
equitable adjustment in the amount due and/or in the time
required for performance. See, International Lithographing,
supra, Sl. op. at 25. Accord, Charles Wiggins d/b/a Wiggins
Construction, ASBCA Nos. 4022, 4613, 58-1 BCA ¶ 1,644.
37 The Board does not ". . . mean to imply that these are the
only questions that may be raised or that they are
necessarily the questions that will ultimately determine the
outcome of the appeal. With the benefit of a hearing these
matters will hopefully become clearer." Fletcher & Sons,
Inc., VABCA No. 2212, 86-3 BCA ¶ 19,123, at 96,658.
38 Indeed, for the Board to resolve the factual conflicts
that emerge from the parties' papers would necessitate "trial
by affidavit," which has long been regarded as an abuse of
the summary judgment procedure. See, Erie Tool Works, supra,
89-1 BCA ¶ 21,316, at 107,490 (citing, Poller v. Columbia
Broadcasting System, Inc., 368 U.S. 464,473 (1962)).